Document:

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                                                                    Exhibit 10.2

                            CENTERPOINT ENERGY, INC.
                           DEFERRED COMPENSATION PLAN

               (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2003)

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                            CENTERPOINT ENERGY, INC.
                           DEFERRED COMPENSATION PLAN

               (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2003)

                                TABLE OF CONTENTS

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                                                                                                                       Page
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ARTICLE I PURPOSES OF PLAN; DEFINITIONS; DURATION.................................................................       2
   1.1   Purposes.................................................................................................       2
   1.2   Definitions..............................................................................................       2
   1.3   Term.....................................................................................................       5

ARTICLE II ADMINISTRATION.........................................................................................       5

ARTICLE III PARTICIPATION.........................................................................................       6
   3.1   Eligibility of Employees and Directors...................................................................       6
   3.2   Designation of Participants..............................................................................       6
   3.3   Election to Participate..................................................................................       6
   3.4   Salary Deferral..........................................................................................       6
   3.5   Bonus Deferral...........................................................................................       7
   3.6   Retainer Fee Deferral....................................................................................       7
   3.7   Meeting Attendance Fees Deferral.........................................................................       8
   3.8   Waiver or Suspension of Deferral.........................................................................       8

ARTICLE IV BENEFICIARY DESIGNATIONS; WITHHOLDING..................................................................       8
   4.1   Beneficiary Designations.................................................................................       8
   4.2   Withholding of Taxes.....................................................................................       8

ARTICLE V BENEFITS................................................................................................       9
   5.1   Benefit Payments.........................................................................................       9
   5.2   Death....................................................................................................      10
   5.3   Disability...............................................................................................      11
   5.4   Payment Upon Termination of Employment...................................................................      11
   5.5   Termination of Employment During Participation Year......................................................      12
   5.6   Benefits for Prior Participation Years, Including the Participation Year Ending
         December 31, 2002........................................................................................      12
   5.7   Terminations Under the Separation Program................................................................      12
   5.8   Terminations Under the 1995 Voluntary Early Retirement Program...........................................      13
   5.9   Terminations under the 2002 Voluntary Early Retirement Program...........................................      14

ARTICLE VI RIGHTS OF PARTICIPANTS.................................................................................      15
   6.1   Limitation of Rights.....................................................................................      15
   6.2   Non-Alienation of Benefits...............................................................................      15
   6.3   Prerequisites to Benefits................................................................................      16
   6.4   Nature of Employer's Obligation..........................................................................      17
</TABLE>

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<S>                                                                                                                     <C>
   6.5   Claims and Review Procedures.............................................................................      17

ARTICLE VII MISCELLANEOUS.........................................................................................      18
   7.1   Amendment or Termination of the Plan.....................................................................      18
   7.2   Reliance Upon Information................................................................................      18
   7.3   Effective Date...........................................................................................      18
   7.4   Governing Law............................................................................................      18
   7.5   Severability.............................................................................................      18
   7.6   Notice...................................................................................................      18
</TABLE>

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                            CENTERPOINT ENERGY, INC.
                           DEFERRED COMPENSATION PLAN

               (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2003)

                                    RECITALS

                  Houston Industries Incorporated, a Texas corporation ("HII"),
established the Houston Industries Incorporated Deferred Compensation Plan,
effective as of January 1, 1989, and as thereafter amended (the "1989 Plan"),
for the benefit of its eligible employees.

                  HII established the Houston Industries Incorporated Deferred
Compensation Plan, effective as of January 1, 1991, and as thereafter amended
(the "1991 Plan"), for the benefit of its eligible employees.

                  CenterPoint Energy, Inc., a Texas corporation (the "Company"),
as successor to HII, became sponsor of the plans effective as of August 31,
2002.

                  The Board of Directors of the Company authorized the merger of
the 1989 Plan with the 1991 Plan and the amendment and restatement of the
resulting merged plan, effective as of January 1, 2003 (the "Plan"), in order to
incorporate all prior amendments to the 1989 Plan and 1991 Plan, as in effect on
December 31, 2002 (the "Prior Plans"), to reflect the merger of Prior Plans, and
to make certain design changes.

                  There shall be no termination and no gap or lapse in time or
effect between the Prior Plans, as each was in effect on December 31, 2002, and
this Plan, as amended and restated effective as of January 1, 2003. The Plan
shall not operate to exclude, diminish, limit or restrict the payments or
continuation of payments of benefits to Participants under the terms of the
Prior Plans as each was in effect on December 31, 2002. Except to the extent
otherwise required to reflect the fact that the Participants' benefits accrued
under the Prior Plans are continued under this Plan, the provisions of this Plan
shall apply only to an Employee or a Director eligible to participate under this
Plan on or after January 1, 2003.

                  NOW, THEREFORE, the Company hereby merges, amends, restates in
its entirety and continues the Prior Plans, as each was in effect on December
31, 2002, in the form of this CenterPoint Energy, Inc. Deferred Compensation
Plan, as amended and restated effective January 1, 2003, which shall read as
follows:

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                                   ARTICLE I

                     PURPOSES OF PLAN; DEFINITIONS; DURATION

         1.1      Purposes. This CenterPoint Energy, Inc. Deferred Compensation
Plan for selected management and highly compensated employees is intended to aid
certain of its employees in making more adequate provision for their retirement
and is intended to be a "top-hat" plan under sections 201(2), 301(a)(3) and
401(a)(1) of the Employee Retirement Income Security Act of 1974.

         1.2      Definitions. Each term below shall have the meaning assigned
thereto for all purposes of this Plan unless the context requires a different
construction.

                  "Agreement" means the deferred compensation agreement, if any,
         between the Employer and the Participant which, for this Plan,
         specifies the amount of Compensation being deferred, the method of
         payment for benefits payable under this Plan at normal retirement, and
         the election of any Early Distribution. Deferrals for each separate
         Participation Year will be covered by a separate Agreement, if any.

                  "Beneficiary" means a person or persons, a trustee or trustees
         of a trust, or a partnership, corporation, limited liability
         partnership, limited liability company, or other entity designated by
         the Participant, as provided in Section 4.1, to receive any amounts
         distributed under the Plan after a Participant's death.

                  "Bonus" means, on and after January 1, 2003, a formula or
         discretionary bonus or incentive compensation paid under the
         CenterPoint Energy, Inc. Short Term Incentive Plan.

                  "Code" means the Internal Revenue Code of 1986, as amended.

                  "Company" means CenterPoint Energy, Inc., a Texas corporation,
         or a successor to CenterPoint Energy, Inc., in the ownership of
         substantially all of its assets.

                  "Commencement Date" means the first day of the Participation
         Year, with respect to which a Compensation deferral occurs.

                  "Committee" means the Benefits Committee or such other
         committee, which shall consist of five or fewer persons, as shall be
         appointed by the Board of Directors of the Company to administer the
         Plan pursuant to Article II hereof.

                  "Compensation" means the salary and Bonus which an Employer
         pays its Employees, and the meeting attendance fees and retainer fee
         paid to a Director by an Employer.

                  "Director" means a member of the board of directors of an
         Employer. A Director who is also an Employee shall be considered an
         Employee for all purposes with respect to salary and Bonus deferrals
         and shall be considered a Director for all purposes with respect to
         deferrals of meeting attendance fees.

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                  "Disability" means a physical or mental condition that
         qualifies as a total and permanent disability under the CenterPoint
         Energy, Inc. Long Term Disability Plan, as amended from time to time.

                  "Early Distribution" means the benefit payment option
         available to a Participant under Section 5.1(a) hereof.

                  "Early Retirement Date" means with respect to an Employee the
         first day of the month coincident with or next following his 60th
         birthday or an earlier age as may be authorized by the Committee in its
         sole discretion; and means with respect to a Director the first day of
         the month coincident with or next following his resignation or removal
         as a Director before his Normal Retirement Date.

                  "Employee" means any person, including an officer of any
         Employer (whether or not he is also a director thereof), who, at the
         time such person is designated a Participant hereunder, is employed by
         an Employer on a full-time basis, who is compensated for such
         employment by a regular salary, and who, in the opinion of the
         Committee, is one of the officers or other key employees of the
         Employer in a position to contribute materially to the continued growth
         and development and to the future financial success of the Employer.
         Any Participant who is an Employee of a Subsidiary shall not be deemed
         to have terminated employment with an Employer for purposes of this
         Plan until the date upon which the Participant is no longer employed by
         any entity which would be considered an "Employer" or Subsidiary
         hereunder.

                  "Employer" means (i) the Company, (ii) each Subsidiary which
         has adopted the Plan with the consent of the Committee, and (iii) each
         other employing organization in which the Company has a direct or
         indirect ownership interest and which has been approved by the
         Committee as an Employer under the Plan, subject to the terms and
         conditions established by the Committee.

                  "Employment" means employment with an Employer as an Employee
         or the current holding of a position as a Director of an Employer.
         Neither the transfer of an Employee Participant from employment by the
         Company to employment by a Subsidiary nor the transfer of an Employee
         Participant from employment by a Subsidiary to employment by the
         Company shall be deemed to be a termination of Employment of such
         Participant. Moreover, the Employment of a Participant shall not be
         deemed to have been terminated because of his absence from active
         employment on account of temporary illness or during authorized
         vacation or during temporary leaves of absence, granted by the Employer
         for reasons of professional advancement, education, health, or
         government service, or during military leave for any period if the
         Participant returns to active employment within 90 days after the
         termination of his military leave, or during any period required to be
         treated as a leave of absence by virtue of any valid law or agreement.
         Notwithstanding the foregoing, from and after October 1, 1997, a
         Participant's employment with STP Nuclear Operating Company shall be
         deemed to constitute "Employment" with an Employer hereunder for all
         purposes except any such Participant shall not be eligible to make any
         additional deferrals of Compensation under the Plan. Further
         notwithstanding the foregoing, from and after the RRI Distribution

                                      -3-

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         Date, a Participant's continuous employment with Reliant Resources,
         Inc. ("RRI") and/or its subsidiaries following such date ("RRI
         Employment") shall be deemed to constitute "Employment" with an
         Employer hereunder (to the extent such Participant commenced RRI
         Employment prior to the RRI Distribution Date and immediately prior to
         such date was otherwise an Employee) for all purposes except any such
         Participant shall not be eligible to make any additional deferrals of
         Compensation under the Plan; provided, however, that such Participant
         made a one-time, irrevocable election on or before December 31, 2000,
         to treat such RRI Employment as Employment for the Plan as described
         herein. The Committee may allow individuals electing not to treat RRI
         Employment as "Employment" hereunder to make a subsequent, one-time
         election, on such form and in such manner as prescribed by the
         Committee, to transfer benefits under this Plan to a deferred
         compensation program or plan sponsored by RRI.

                  "Interest Crediting Rate" means, for a given Plan Year, a rate
         of interest equivalent to the average Moody's Rate for such year plus
         two percentage points (2%) or, with respect to a Participant who is
         designated to receive a higher rate of interest by the Committee of the
         Board, such higher rate as determined by the Committee of the Board and
         communicated to such Participant.

                  "Moody's Rate" means a rate of interest equal to the composite
         yield on Moody's Long-Term Corporate Bond Index for the calendar month
         as determined from Moody's Bond Record published by Moody's Investor's
         Service, Inc. (or any successor thereto), or, if such yield is no
         longer published, a substantially similar average selected by the
         Committee.

                  "Normal Retirement Distribution" means the benefit payment
         options available to a Participant under Section 5.1(b) hereof.

                  "Normal Retirement Date" means with respect to an Employee the
         first day of the month coincident with or next following his 65th
         birthday, and means with respect to a Director the first day of the
         month coincident with or next following his 70th birthday.

                  "Participant" means an Employee or a Director who has been
         designated by the Committee to participate in the Plan pursuant to
         Section 3.2 hereof and who has elected to participate in the Plan
         pursuant to Section 3.3.

                  "Participation Year" means (i) with respect to Compensation in
         the form of a Bonus, the Plan Year during which the Bonus would have
         been paid if not deferred, (ii) with respect to Compensation in the
         form of salary, the Plan Year during which a Participant performs
         services for the Employer for a salary, and (iii) with respect to
         Compensation in the form of a Director's meeting attendance fees and a
         Director's retainer fee, the Plan Year during which a Participant
         performs services for the Company or a Subsidiary for such fees.

                  "Plan" means the CenterPoint Energy, Inc. Deferred
         Compensation Plan, as amended and restated effective January 1, 2003,
         and as set forth herein, as the same may hereafter be amended from time
         to time.

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                  "Plan Year" means the calendar year.

                  "Prior Agreement" means the Deferred Compensation Agreement,
         if any, entered into between the Employer and Participant pursuant to
         provisions of the Prior Plan.

                  "Prior Plan" means collectively and individually, as
         applicable, the CenterPoint Energy, Inc. Deferred Compensation Plan, as
         amended and restated effective January 1, 1989, and thereafter amended,
         and the CenterPoint Energy, Inc. Deferred Compensation Plan, as amended
         and restated effective January 1, 1991, and thereafter amended, as each
         was in effect on December 31, 2002, and each of which is incorporated
         herein by reference for purposes of its applicability under this Plan
         as to Compensation deferred with respect to Participation Years
         commencing before January 1, 2003.

                  "RRI Distribution Date" means September 30, 2002, which is the
         date the Company distributed to its shareholders all shares of common
         stock of Reliant Resources, Inc. that the Company owned as of such
         date.

                  "Subsidiary" means a subsidiary corporation with respect to
         the Company as defined in Section 424(f) of the Code.

                  Words used in this Plan in the singular shall include the
plural and in the plural the singular, and the gender of words used shall be
construed to include whichever may be appropriate under any particular
circumstances of the masculine, feminine or neuter genders.

         1.3      Term. The effective date of the Plan, as amended and restated,
is January 1, 2003. The Plan shall continue until terminated by the Board of
Directors of the Company. The Committee, in its sole discretion, may or may not
authorize deferral of Compensation during the term of the Plan.

                                   ARTICLE II

                                 ADMINISTRATION

                  The Plan shall be administered by the Committee, which shall
represent the Company and other Employers in all matters concerning the
administration of the Plan. Members of the Committee may be Participants under
the Plan, but no member may vote on any matter relating to his benefits under
the Plan. The Committee shall have primary responsibility for the administration
and operation of the Plan and shall have all powers necessary to carry out the
provisions of the Plan, including the power to determine which Employees and
Directors shall be Participants under the Plan and which Compensation may be
subject to deferral. The determination of the Committee as to the construction,
interpretation, or application of any terms and provisions of the Plan,
including whether and when there has been a termination of an Employee's
employment, shall be final, binding, and conclusive upon all persons.

                                      -5-

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                                  ARTICLE III

                                  PARTICIPATION

         3.1      Eligibility of Employees and Directors. An Employee must be a
manager or a highly compensated (within the meaning of Section 414(q) of the
Code) salaried employee of an Employer to be eligible to participate in the
Plan. All Directors shall be eligible to participate in the Plan. The Committee
may from time to time establish additional eligibility requirements for
participation in the Plan.

         3.2      Designation of Participants. Prior to the commencement of any
Participation Year, the Committee shall designate and notify in writing the
Employees and/or Directors who are eligible to defer Compensation under this
Plan. A designation of an Employee or Director to participate with respect to
Compensation for a particular Participation Year shall not automatically entitle
such Participant to participate with respect to any other Participation Year.
The Committee may, in its sole discretion, notify a Participant that he is
entitled to participate with respect to all future Compensation for all
Participation Years beginning after the date of notification by the Committee,
in which event the Participant may continue to participate and elect to defer
Compensation awarded in respect of future Participation Years until such time as
the Committee notifies the Participant in writing that he may not participate
for future Participation Years.

         3.3      Election to Participate. After an Employee or Director has
been notified by the Committee that he is eligible to participate in the Plan he
must notify the Committee that he chooses to participate in the Plan. An
election to participate in the Plan shall be effective upon its receipt by the
Committee. A Participant's election (i) shall specify the type or types and the
amount or amounts of Compensation that he wishes to defer and the manner of such
deferral pursuant to Sections 3.4 through 3.7 hereof; (ii) shall specify, if the
Participant so elects, that he wishes to receive an Early Distribution of
benefits with respect to some or all deferrals for such Participation Year under
Section 5.1(a) hereof; and (iii) shall specify the manner of Normal Retirement
Distribution the Participant chooses with respect to such deferrals under
Section 5.1(b) hereof.

         3.4      Salary Deferral. A Participant's election to defer the payment
of salary must be made prior to the first day of the Plan Year in which the
salary is earned by the Participant. Such election will be irrevocable as of
December 31 of the calendar year preceding the calendar year in which the salary
is earned.

         A Participant may not elect to defer more than 100% of his annual
salary with respect to a particular Participation Year. The amount of
Compensation elected to be deferred under this Section 3.4 shall be withheld
from the Participant's salary during a Plan Year in equal amounts. Any interest
which accrues on such deferrals pursuant to Article V shall accrue from January
1 of each Participation Year on the total amount of salary deferred during the
Participation Year under this Section 3.4.

         A Participant may also make a "Savings Plan excess deferral election"
with respect to the payment of Compensation resulting from the limitations under
Section 401(a)(17)

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or 415(c) of the Code (or any successor provisions) (the "Applicable Limits")
with respect to contributions made to the CenterPoint Energy, Inc. Savings Plan,
as amended from time to time ("Savings Plan"). A Savings Plan excess deferral
election must be specified as a percentage of Compensation, and will only become
effective during the Participation Year at such time as the Participant is
prevented from accruing additional benefits under the Savings Plan by reason of
the application of Applicable Limits. A Savings Plan excess deferral election
under this Section 3.4 will not become effective solely on account of a
Participant's pre-tax deferrals under the Savings Plan reaching an annual limit
set forth in Section 402(g) of the Code (or any successor provision), and the
limitation in such section is not an Applicable Limit. The percentage of
Compensation elected to be deferred as a Savings Plan excess deferral election
shall be withheld from the Participant's Compensation during each pay period
beginning with the pay period in which the Participant reaches an Applicable
Limit and shall continue during each pay period for the remainder of the
Participation Year. Any interest which accrues on such Savings Plan excess
deferrals pursuant to Article V shall accrue from January 1 of each
Participation Year on the total amount of salary deferred during the Participant
Year under this Section 3.4.

         3.5      Bonus Deferral. A Participant's election to defer the payment
of a Bonus must be made prior to the first day of the Plan Year in which the
Bonus is paid to the Participant. Such election will be irrevocable as of
December 31 of the calendar year preceding the calendar year in which the Bonus
is paid. The foregoing notwithstanding, for the Plan Year commencing January 1,
2003, any deferral of a Bonus earned in 2002 shall be accomplished under the
terms of the Prior Plan.

         A Participant may not elect to defer more than 100% of his annual cash
Bonus award with respect to a particular Participation Year. The amount of
Compensation elected to be deferred under this Section 3.5 shall be withheld
from the Participant's Bonus otherwise payable during the Plan Year. If the
amount of Bonus awarded to the Participant with respect to a Participation Year
is less than the amount of Bonus which the Participant had elected to defer for
such Participation Year, the entire amount of the Bonus awarded shall be
deferred in accordance with this Section 3.5, and no further deferral shall be
made with respect to such election for such Participation Year. Any interest
which accrues on such deferrals pursuant to Article V shall accrue from January
1 of each Participation Year on the total amount of the Bonus deferred during
the Participation Year under this Section 3.5.

         3.6      Retainer Fee Deferral. A Participant's election to defer the
payment of a retainer fee must be made prior to the first day of the Plan Year
in which the retainer fee is earned by the Participant. Such election will be
irrevocable as of December 31 of the Plan Year preceding the Participation Year
with respect to which the retainer fee is payable.

         A Participant may not elect to defer more than 100% of his annual
retainer fee with respect to a particular Participation Year. The amount of
Compensation elected to be deferred under this Section 3.6 shall not be paid but
shall be withheld from the Participant's retainer fee otherwise payable during
the Plan Year. Any interest which accrues on such deferrals pursuant to Article
V shall accrue from January 1 of each Participation Year on the total amount of
Compensation elected to be deferred under this Section 3.6.

                                      -7-

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         3.7      Meeting Attendance Fees Deferral. A Participant's election to
defer the payment of meeting attendance fees must be made prior to the first day
of the Plan Year in which the meeting attendance fees are paid to the
Participant. Such election will be irrevocable as of December 31 of the Plan
Year preceding the Participation Year with respect to which the meeting
attendance fees are payable.

         A Participant may not elect to defer more than 100% of the total
meeting attendance fees payable in any Participation Year. The amount of
Compensation elected to be deferred pursuant to Section 3.7 shall be withheld
from each meeting attendance fee earned by a Director during a Participation
Year in equal percentages. Any interest which accrues on such deferrals pursuant
to Article V shall accrue from January 1 of each Participation Year on the total
amount of Compensation elected to be deferred under this Section 3.7.

         3.8      Waiver or Suspension of Deferral. The Committee may, in its
sole discretion, grant a waiver or suspension of a Participant's irrevocable
deferral election under this Article III for such time as the Committee may deem
to be necessary upon a finding that the Participant has suffered a financial
hardship. The Committee may also, in its sole discretion, permit a Participant
to take prospective remedial action within the same year in order to bring his
total Compensation deferral for the Participation Year in which the event
resulting in a waiver or suspension occurred to the level of his original
deferral election, provided that the limits of this Article III are not thereby
exceeded.

                                   ARTICLE IV

                      BENEFICIARY DESIGNATIONS; WITHHOLDING

         4.1      Beneficiary Designations. Each person becoming a Participant
shall file with the Committee, in the form prescribed by the Committee, a
designation of one or more Beneficiaries to whom distributions otherwise due the
Participant shall be made in the event of his death while in the employ of the
Company or after termination of Employment but prior to the complete
distribution of the benefits payable with respect to the Participant. Such
designation shall be effective when received by the Committee. The Participant
may from time to time revoke or change any such designation of a Beneficiary by
notifying the Committee. If there is no valid designation of the Beneficiary on
file with the Committee at the time of the Participant's death, or if all of the
Beneficiaries designated therein shall have predeceased the Participant or
otherwise ceased to exist, the Beneficiary shall be, and any payment hereunder
shall be made to, the Participant's spouse, if he or she survives the
Participant, or otherwise to the Participant's estate. If the Beneficiary,
whether under a valid beneficiary designation or under the preceding sentence,
shall survive the Participant but die before receiving all payments hereunder,
the balance of the benefits which would have been paid to the Beneficiary had he
or she lived shall, unless the Participant's designation provided otherwise, be
distributed to the Beneficiary's estate.

         4.2      Withholding of Taxes. The Committee shall cause the Employer
to deduct from the amount of all benefits paid under the Plan any taxes required
to be withheld by the federal government or any state or local government.

                                      -8-

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                                   ARTICLE V

                                    BENEFITS

         5.1      Benefit Payments. The benefit payments with respect to
deferrals of Compensation for a specific Participation Year will be determined
as set forth below:

         (a)      Early Distribution. At the time a Participant elects to defer
     Compensation for a Participation Year pursuant to Section 3.3 hereof, he
     may elect to receive an Early Distribution of benefits attributable to such
     Compensation. The Early Distribution will represent either (i) 50% or (ii)
     100% of the Compensation deferred for that Participation Year, and will
     include interest amounts accrued thereon at the applicable Interest
     Crediting Rates. The Participant shall receive such Early Distribution
     within 95 days of the beginning of any year selected by the Participant,
     which year may not commence earlier than three years from the end of the
     Plan Year in which the Participant deferred such Compensation. A
     Participant may make only one Early Distribution election under this Plan
     for each Participation Year.

         (b)      Normal Retirement Distribution. At the time a Participant
     elects to defer Compensation for a Participation Year pursuant to Section
     3.3 hereof, he must elect to receive a Normal Retirement Distribution of
     benefits attributable to such Compensation, taking into account any Early
     Distribution election made by him under Section 5.1(a). The Participant may
     elect to receive a Normal Retirement Distribution equal either to (i) a
     lump-sum distribution of the amounts of Compensation deferred with interest
     thereon, compounded annually, at the applicable Interest Crediting Rates,
     minus any Early Distributions, or (ii) a benefit in the form of 15 annual
     installment payments of such Compensation, including interest thereon,
     compounded annually, at the applicable Interest Crediting Rates, minus any
     Early Distributions. Payment of a Normal Retirement Distribution will be
     made, if payable in a lump sum, in the January following the Participant's
     termination of employment on or after his Normal Retirement Date. Payment
     of a Normal Retirement Distribution will be made, if payable in 15 annual
     installments, commencing the month coincident with or next following the
     month in which the Participant terminates employment on or after his Normal
     Retirement Date, and will be paid in that same month in each remaining
     year. For purposes of determining a benefit payable in the form of 15
     installment payments under this Section 5.1(b), the Interest Crediting Rate
     shall be the greater of (i) the Interest Crediting Rate in effect for the
     Plan Year in which an Employee Participant attains age 65 or a Director
     Participant attains age 70 or (ii) the Interest Crediting Rate in effect
     for the Plan Year immediately prior to which an Employee Participant
     attains age 65 or a Director Participant attains age 70. With respect to
     deferrals made after January 1, 1998, the Interest Crediting Rate shall be
     the Interest Crediting Rate in effect for the Plan Year immediately prior
     to which an Employee Participant attains age 65 or a Director Participant
     attains age 70. This Interest Crediting Rate will constitute the applicable
     Interest Crediting Rate for all years thereafter in which the Normal
     Retirement Distribution is paid or payable.

         (c)      Failure to Elect Method of Distribution. If a Participant
     fails to make an election as to the manner in which a Normal Retirement
     Distribution will be paid, such

                                      -9-

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Normal Retirement Distribution will be made in the form of a lump-sum
distribution in accordance with Section 5.1(b) above, as if the Participant had
specifically so elected.

         (d)      Termination After Age 55 and Prior to Early Retirement Date.
Notwithstanding any provision of this Article V to the contrary, a Participant
who terminates employment (i) after December 31, 2002, and (ii) on or after the
first day of the month coincident with or next following the Participant's 55th
birthday, but prior to his Early Retirement Date, shall receive his benefit
under the Plan in 15 annual installment payments, with such payments commencing
on the first day of the month coincident with or next following the month in
which the Participant terminates employment and payable thereafter in that same
month in each remaining year; provided, however, that (x) the Participant did
not elect to receive his benefit under the Plan in a lump-sum distribution or as
an Early Distribution and (y) the Participant consents to receiving his benefit
attributable to Compensation deferred under the Prior Plan in accordance with
this Section 5.1(d). If a Participant, who meets the requirements of this
Section 5.1(d), elected to receive his benefits under the Plan in a lump-sum
distribution or as an Early Distribution, then his benefit under the Plan shall
be paid or commence, as applicable, during the January following the year in
which the Participant terminates employment. If the Participant does not so
consent, his Prior Plan benefit shall be paid as otherwise provided under this
Article V.

         (e)      Termination After Early Retirement Date and Prior to Normal
Retirement Date. Any Participant who terminates employment after his Early
Retirement Date but prior to his Normal Retirement Date, will (if he is living
on the date of payment) receive a lump-sum distribution or 15 annual installment
payments, in accordance with his election under Section 5.1(b) above, commencing
once he has attained his Normal Retirement Date. Such commencement date may be
accelerated by the Committee, in its sole discretion, with a corresponding
reduction in the amount of the payment, but may not occur before a Participant's
termination of employment.

         (f)      Benefits Stated in Agreement. The form of benefit payments
elected will be stated in the Agreement, if any, between the Employer and the
Participant, based on the Company's administrative guidelines under the Plan.

         (g)      Commutation of Benefit Payments. Any installment benefits, at
the request of the Participant and in the discretion of the Committee, may be
commuted to a lump-sum payment or may be paid over a shorter period of time,
with interest accrued to such date at the applicable Interest Crediting Rate.

5.2      Death.

         (a)      Death Prior to Commencement of Normal Retirement Distribution.
If a Participant dies (i) prior to his Normal Retirement Date and prior to his
termination of employment or (ii) after his termination of employment after his
Early Retirement Date, but prior to the commencement of a Normal Retirement
Distribution payable in 15 annual installments, the payments otherwise described
in Section 5.1 not theretofore made shall not be made, but the Employer shall
pay Participant's Beneficiary the sum or sums of

                                      -10-

<PAGE>

         Compensation actually deferred with interest thereon from the
         Commencement Date through the date of payment at the applicable
         Interest Crediting Rates less an amount equal to any Early
         Distributions or other benefits paid prior to Participant's death.
         Payments made pursuant to this Section 5.2(a) shall be made within
         approximately 95 days following the date of Participant's death.
         Notwithstanding the foregoing, if there is a conflict between the
         provisions of this Section and the terms of the Participant's Severance
         Agreement (as further described in Section 5.4), the terms of the
         Severance Agreement shall control.

                  (b)      Death After Normal Retirement Date. If the
         Participant dies (i) after his Normal Retirement Date but prior to his
         termination of employment, (ii) after his termination of employment,
         provided the Participant had attained his Normal Retirement Date on or
         before the date of such termination, or (iii) after commencement of a
         Normal Retirement Distribution in the form of 15 annual installment
         payments pursuant to Section 5.1 but prior to completion of all such
         payments, the Employer shall make (or continue to make) such payments
         provided for in Section 5.1 to the Participant's Beneficiary.
         Notwithstanding the foregoing, if there is a conflict between the
         provisions of this Section and the terms of the Participant's Severance
         Agreement (as further described in Section 5.4), the terms of the
         Severance Agreement shall control.

                  (c)      Commutation of Death Benefit. Any installment death
         benefits, at the request of a Beneficiary and in the sole discretion of
         the Committee, may be commuted to a lump sum payment or may be paid
         over a shorter period of time, with interest accrued to such date at
         the applicable Interest Crediting Rate. Notwithstanding the foregoing,
         if there is a conflict between the provisions of this Section and the
         terms of the Participant's Severance Agreement (as further described in
         Section 5.4), the terms of the Severance Agreement shall control.

         5.3      Disability. In the event of the Disability of a Participant
while in the employ of an Employer, the Participant shall be considered to have
remained in the continuous employment of the Employer during such Disability
until his Normal Retirement Date or earlier death. The benefits payable to such
Participant under the Plan shall be paid in the amounts and at the times
otherwise provided in Section 5.1, all in accordance with the Participant's
initial election under Section 3.3, except that at the request of a Participant
and in the discretion of the Committee, any such payments may be commuted to a
lump-sum payment or paid over a shorter period of time, with interest accrued to
such date at the applicable Interest Crediting Rate.

         5.4      Payment Upon Termination of Employment. If the employment of
an Employee Participant is terminated for any reason other than death,
retirement at or after Normal Retirement Date, or early retirement in accordance
with the provisions of Section 5.1(d) or 5.1(e), a Normal Retirement
Distribution payable in 15 annual installments as described in Section 5.1(b)
shall not be made, but the Employer shall pay the Participant the sum or sums of
Compensation actually deferred, with interest thereon, compounded annually, at
the applicable Moody's Rate for each Participation Year, from the Commencement
Date through the date of payment; provided that for any Participation Year in
which the Committee determines that such Participant's deferral election was
undertaken solely to preserve the deductibility of the Participant's
Compensation pursuant to Section 162(m) of the Code, then interest on amounts

                                      -11-

<PAGE>

deferred with respect to such Participation Year shall be calculated using the
applicable Interest Crediting Rate for such Participation Year, rather than the
applicable Moody's Rate. Notwithstanding the foregoing, the amount payable under
this Section 5.4 shall be reduced by amounts equal to any Early Distribution or
other benefit paid prior thereto, with adjustments for interest. Payments under
this Section 5.4 shall be made within 95 days following the date of
Participant's termination of employment or as soon as practicable thereafter. If
any Participant who has entered into a Severance Agreement, as defined in the
CenterPoint Energy, Inc. Executive Severance Benefits Plan, effective as of
September 3, 1997, and as thereafter amended, experiences a termination giving
rise to a right to benefits under his Severance Agreement and complies with the
conditions set forth in his Severance Agreement for the receipt of benefits
thereunder, then such Participant shall be treated as if his termination did not
occur until after his Early Retirement Date, and the provisions in Section
5.1(e) shall apply.

         5.5      Termination of Employment During Participation Year. If
Participant terminates his employment with an Employer for any reason during the
Participation Year for which Compensation is to be deferred, the amount of
deferral specified in his Agreement, if any, for that Participation Year shall
be adjusted to reflect the amount actually deferred for the Participation Year
prior to such termination. If Participant terminates employment with an Employer
for any reason during the Participation Year for which he has elected to defer
the payment of a Bonus, such election shall become null and void with respect to
any Bonus which has not become payable to the Participant as of the date the
Participant terminates his employment with an Employer.

         5.6      Benefits for Prior Participation Years, Including the
Participation Year Ending December 31, 2002. Notwithstanding any other provision
of the Plan to the contrary, for Participation Years ending on or before
December 31, 2002, benefits awarded under the Prior Plan shall be distributed in
accordance with, and governed by the terms of, the Prior Plan and any Prior
Agreements except, where applicable under the Plan, as otherwise consented to by
the Participant. The interest rates used for determination of benefits payable
under the Prior Plan shall be those set out in a Participant's Prior Agreement,
if any.

         5.7      Terminations Under the Separation Program.

                  (a)      Voluntary Terminations.

                           (i)      Prior to Early Retirement Date.
                  Notwithstanding any other provision of the Plan to the
                  contrary, if the employment of a Participant is terminated
                  under the Voluntary Early Retirement Program adopted by the
                  Board of Directors of the Company on January 8, 1992 and prior
                  to the first day of the month coincident with or next
                  following the Participant's 60th birthday, a Normal Retirement
                  Distribution as described in Section 5.1 shall not be made,
                  but the Employer (x) shall pay the Participant the sum or sums
                  of Compensation actually deferred, with interest thereon,
                  compounded annually, at the applicable Interest Crediting Rate
                  for each Participation Year, from the Commencement Date
                  through the date of payment, (y) shall make a lump-sum
                  distribution or 15 annual installment payments, in accordance
                  with the Participant's election under

                                      -12-

<PAGE>

                  Section 5.1(b) above, and if payable in a lump sum, in the
                  January following the Participant's termination of employment
                  or if payable in installments, commencing the month following
                  the month in which the Participant terminates employment and
                  payable thereafter in that same month in each remaining year,
                  and (z) shall not make any future Early Distributions to such
                  Participant.

                           (ii)     After Early Retirement Date. If the
                  employment of a Participant is terminated as described in
                  (a)(i) above but after the first day of the month coincident
                  with or next following the Participant's 60th birthday,
                  distributions (including Early Distributions) shall be made as
                  otherwise provided in the preceding Sections of this Article
                  V.

                  (b)      Involuntary Terminations.

                           (i)      Prior to Early Retirement Date.
                  Notwithstanding any other provision of the Plan to the
                  contrary, if the employment of a Participant is terminated
                  involuntarily under the severance program adopted by the Board
                  of Directors of the Company on January 8, 1992 and prior to
                  the first day of the month coincident with or next following
                  the Participant's 60th birthday, a Normal Retirement
                  Distribution as described in Section 5.1 shall not be made,
                  but the Employer (x) shall pay the Participant the sum or sums
                  of Compensation actually deferred, with interest thereon,
                  compounded annually, at the applicable Interest Crediting Rate
                  for each Participation Year, from the Commencement Date
                  through the date of payment, (y) shall pay such amount in a
                  lump sum (regardless of any election previously made by the
                  Participant) within 95 days following the date of
                  Participant's termination of employment or as soon as
                  practicable thereafter, and (z) shall not make any future
                  Early Distributions to such Participant.

                           (ii)     After Early Retirement Date. If the
                  employment of a Participant is terminated involuntarily as
                  described in (b)(i) above but after the first day of the month
                  coincident with or next following the Participant's 60th
                  birthday, distributions (including Early Distributions) shall
                  be made as otherwise provided in the preceding Sections of
                  this Article V.

                  (c)      Commutation. Any installment payments hereunder may
         be commuted as provided in Section 5.1(g).

         5.8      Terminations Under the 1995 Voluntary Early Retirement
Program.

                  (a)      Prior to Early Retirement Date. Notwithstanding any
         other provision of the Plan to the contrary, if the employment of a
         Participant who fulfills the requirements for the Voluntary Early
         Pension for 1995 Program participants under Section 9.7(a) of the
         CenterPoint Energy, Inc. Retirement Plan is terminated prior to the
         first day of the month

                                      -13-

<PAGE>

         coincident with or next following the date of the Participant's 60th
         birthday, a Normal Retirement Distribution as described in Section 5.1
         or a distribution as described in Section 5.4 shall not be made, but
         the Employer (x) shall pay the Participant the sum or sums of
         Compensation actually deferred, with interest thereon, compounded
         annually, at the applicable Interest Crediting Rate for each
         Participation Year, from the Commencement Date through the date of
         payment, minus any Early Distributions, (y) shall make a lump-sum
         distribution or 15 annual installment payments in accordance with the
         Participant's election under Section 5.1(b) and, if payable in a lump
         sum, in the January following the Participant's termination of
         employment or, if payable in installments, commencing the month
         following the month in which the Participant terminates employment and
         payable thereafter in that same month in each remaining year, and (z)
         shall not make any future Early Distributions to such Participant.

                  (b)      After Early Retirement Date. If the employment of a
         Participant is terminated voluntarily as described in (a) above but
         after the first day of the month coincident with or next following the
         date of the Participant's 60th birthday, distributions (including Early
         Distributions) shall be made as otherwise provided in this Article V.

                  (c)      Commutation. Any installment payments hereunder may
         be commuted as provided in Section 5.1(g).

         5.9      Terminations under the 2002 Voluntary Early Retirement
Program.

                  (a)      Prior to Early Retirement Date. Notwithstanding any
         other provisions of the Plan to the contrary, if a Participant who
         fulfills the requirements of an "Eligible VERP Employee" pursuant to
         Section 8.6 of the CenterPoint Energy, Inc. Retirement Plan is
         terminated prior to the first day of the month coincident with or next
         following the date of the Participant's 60th birthday and the
         Participant consents to the election of this amendment to the Plan, a
         Normal Retirement Distribution as described in Section 5.1 or a
         distribution as described in Section 5.4 shall not be made, but the
         Employer (x) shall pay the Participant the sum or sums of Compensation
         actually deferred, with interest thereon, compounded annually, at the
         applicable Interest Crediting Rate for each Participation Year, from
         the Commencement Date through the date of payment, minus any Early
         Distributions paid to date, (y) shall make a lump sum distribution or
         15 annual installment payments in accordance with the Participant's
         election under Section 5.1(b) and, if payable in a lump sum, in the
         January following the Participant's termination of employment or, if
         payable in installments, commencing on the first day of the month
         coincident with or next following the month in which the Participant
         terminates employment and payable thereafter in that same month in each
         remaining year, and (z) shall not make any future Early Distributions
         to such Participant.

                  (b)      After Early Retirement Date. If the employment of a
         Participant is terminated voluntarily as described in subsection (a)
         above but after the first day of the month coincident with or next
         following the date of the Participant's 60th birthday, distributions
         (including Early Distributions) shall be made as otherwise provided in
         this Article V.

                                      -14-

<PAGE>

                  (c)      Commutation. Any installment payment hereunder may be
         commuted as provided in Section 5.1(g).

                                   ARTICLE VI

                             RIGHTS OF PARTICIPANTS

         6.1      Limitation of Rights. Nothing in this Plan shall be construed
to:

                  (a)      Give any Employee of an Employer or any Director any
         right to be designated a Participant in the Plan other than in the sole
         discretion of the Committee;

                  (b)      Limit in any way the right of the Employer to
         terminate a Participant's employment at any time; or

                  (c)      Be evidence of any agreement or understanding,
         express or implied, that the Company or any other Employer will employ
         a Participant in any particular position or at any particular rate of
         remuneration.

         6.2      Non-Alienation of Benefits. No right or benefit under this
Plan shall be subject to anticipation, alienation, transfer, sale, assignment,
pledge, encumbrance or charge, whether voluntary, involuntary, direct or
indirect, by operation of law or otherwise, including, without limitation, a
change in beneficial interest of any trust and a change in ownership of a
corporation or partnership, but not including a change of legal and beneficial
title of a right or benefit resulting from the death of any Participant or the
spouse of any Participant (any such proscribed transaction hereinafter a
"Disposition") and any attempted Disposition will be null and void. No right or
benefit hereunder shall in any manner be liable for or subject to any debts,
contracts, liabilities, or torts of any Participant or other person entitled to
such benefits. The foregoing provisions of this Section 6.2 shall not apply to a
domestic relations order awarding any benefits under the Plan to the divorced
spouse of a Participant. The foregoing provisions of this Section 6.2 shall also
not apply to an irrevocable Disposition of a right or benefit under this Plan to
a "Permitted Assignee," as defined below, by (i) a Participant age 55 or older
(an "Eligible Participant"), or (ii) a "Permitted Assignee," as defined below,
who has received an assignment from an Eligible Participant pursuant to this
sentence.

                  (a)      Permitted Assignee. The term "Permitted Assignee"
         shall mean:

                           (i)      The Eligible Participant;

                           (ii)     A spouse of the Eligible Participant;

                           (iii)    Any person who is a lineal ascendant or
                  descendant of the Eligible Participant or the Eligible
                  Participant's spouse;

                           (iv)     Any brother or sister of the Eligible
                  Participant;

                                      -15-

<PAGE>

                           (v)      Any spouse of any individual described in
                  subparagraph (iii) or (iv);

                           (vi)     A trustee of any trust which, at the
                  applicable time, is 100% Actuarially Held for a Permitted
                  Assignee or Assignees (as defined in Section 6.2(c));

                           (vii)    Any corporation in which, at the applicable
                  time, each class of stock is 100% owned by a Permitted
                  Assignee or Permitted Assignees;

                           (viii)   Any partnership in which, at the applicable
                  time, each class of partnership interest is 100% owned by a
                  Permitted Assignee or Permitted Assignees; or

                           (ix)     Any limited liability company or other form
                  of incorporated or unincorporated business organization in
                  which each class of stock, membership or other equity interest
                  is 100% owned by a Permitted Assignee or Assignees.

                  (b)      Subsequent Assignees. This Section 6.2 shall be fully
         applicable to all Permitted Assignees, and the provisions of this
         Section 6.2 shall be fully applicable to any right or benefit
         transferred by an Eligible Participant to any Permitted Assignee as if
         such Permitted Assignee were an Eligible Participant; provided,
         however, that no Permitted Assignee shall be deemed an Eligible
         Participant for determining the persons who constitute Permitted
         Assignees under Section 6.2(a). Any Permitted Assignee acquiring a
         right or benefit under this Plan shall execute and deliver to the
         Committee an Agreement pursuant to which such Permitted Assignee agrees
         to be bound by all of the terms and provisions of the Plan, provided
         that the failure to execute and deliver such an Agreement shall not be
         deemed to relieve such Permitted Assignee of the restrictions imposed
         by the Plan. Any attempted Disposition of a right or benefit under this
         Plan in breach of this Section 6.2, whether voluntary, involuntary, by
         operation of law or otherwise shall be null and void.

                  (c)      Actuarially Held. In making the determination whether
         a trust is 100% Actuarially Held for Permitted Assignee(s), a trust, at
         the applicable point in time, is 100% Actuarially Held for Permitted
         Assignee or Assignees when 100% of the actuarial value of the
         beneficial interests of the trust, except as provided in the following
         sentence, are held for a Permitted Assignee or Permitted Assignees. For
         purposes of making the determination described above, the possibility
         that an interest in a trust may be appointed pursuant to a special or
         general power of appointment shall be ignored; provided, that the
         actual exercise of any such power of appointment shall not be ignored.

         6.3      Prerequisites to Benefits. No Participant, nor any Beneficiary
or other person claiming through a Participant, shall have any right or interest
in the Plan, or any benefits hereunder, unless and until all the terms,
conditions, and provisions of the Plan which affect such Participant or such
other person shall have been complied with as specified herein.

                                      -16-

<PAGE>

         6.4      Nature of Employer's Obligation. This Plan is intended to be,
and shall be construed as, an unfunded plan maintained by each Employer
primarily for the purpose of providing deferred compensation for a select group
of its management or highly compensated salaried employees. The benefits
provided under this Plan shall be a general, unsecured obligation of the
Employer payable solely from the general assets of the Employer, and neither the
Participant nor the Participant's Beneficiary or estate shall have any interest
in any assets of the Employer by virtue of this Plan. No fund or other assets
will ever be set aside or segregated for the benefit of the Participant or the
Participant's Beneficiary under this Plan. The adoption of the Plan and any
setting aside of amounts by an Employer with which to discharge its obligations
hereunder shall not be deemed to create a trust; legal and equitable title to
any funds so set aside shall remain in the Employer and any funds so set aside
shall remain subject to the general creditors of the Employer.

         6.5      Claims and Review Procedures.

                  (a)      Claims Procedure. If any person believes he or she is
         entitled to any rights or benefits under the Plan, such person may file
         a claim in writing with the Committee. If any such claim is wholly or
         partially denied, the Committee will notify such person of its decision
         in writing. Such notification will contain (i) specific reasons for the
         denial, (ii) specific reference to pertinent Plan provisions, (iii) a
         description of any additional material or information necessary for
         such person to perfect such claim and an explanation of why such
         material or information is necessary, and (iv) information as to the
         steps to be taken if the person wishes to submit a request for review,
         the time limits applicable to such procedures, and a statement of the
         person's rights following an adverse benefit determination on review,
         including a statement of his or her right to file a lawsuit under the
         Employee Retirement Income Security Act of 1974 ("ERISA") if the claim
         is denied on appeal. Such notification will be given within 90 days
         after the claim is received by the Committee (or within 180 days, if
         special circumstances require an extension of time for processing the
         claim, and if written notice of such extension and circumstances is
         given to such person within the initial 90-day period).

                  (b)      Claim Review Procedure. Within 60 days after the date
         on which a person receives a notice of denial (or within 60 days after
         the date on which such denial is considered to have occurred), such
         person or his or her duly authorized representative ("Applicant") may
         (i) file a written request with the Committee for a review of his or
         her denied claim; (ii) review pertinent documents; and (iii) submit
         issues and comments in writing. The Committee shall render a decision
         no later than the date of its regularly scheduled meeting next
         following receipt of a request for review, except that a decision may
         be rendered no later than the second such meeting if the request is
         received within 30 days of the first meeting. The Applicant may request
         a formal hearing before the Committee which the Committee may grant in
         its discretion. Notwithstanding the foregoing, under special
         circumstances that require an extension of time for rendering a
         decision (including, but not limited to, the need to hold a hearing),
         the decision may be rendered not later than the date of the third
         regularly scheduled Committee meeting following the receipt of the
         request for review. If such an extension is required, the Applicant
         will be advised in writing before the extension begins. The decision on
         review shall be in written or electronic notice of the final
         determination. If the claim is denied in

                                      -17-

<PAGE>

         whole or part, such notice, which shall be in a manner calculated to be
         understood by the person receiving such notice, shall include the
         specific reasons for the decision, the specific references to the
         pertinent plan provisions on which the decision is based, that the
         person is entitled to receive, upon request and free of charge,
         reasonable access to, and copies of, all documents, records, and other
         information relevant to the claim for benefits, and a statement of the
         person's right to file a lawsuit under ERISA.

                  Benefits under this Plan will only be paid if the Committee
decides, in its discretion, that a person is entitled to them. Moreover, no
action at law or in equity shall be brought to recover benefits under this Plan
prior to the date the claimant has exhausted the administrative process of
appeal available under the Plan.

                                  ARTICLE VII

                                  MISCELLANEOUS

         7.1      Amendment or Termination of the Plan. The Board of Directors
of the Company may amend or terminate this Plan at any time. Any such amendment
or termination shall not, however, without the written consent of the affected
Participant, reduce the interest rate applicable to, or otherwise adversely
affect the rights of a Participant with respect to, Compensation with respect to
which a Participant made an irrevocable deferral election before the later of
the date that such amendment is executed or effective.

         7.2      Reliance Upon Information. The Committee shall not be liable
for any decision or action taken in good faith in connection with the
administration of this Plan. Without limiting the generality of the foregoing,
any such decision or action taken by the Committee in reliance upon any
information supplied to it by an officer of the Company, the Company's legal
counsel, or the Company's independent accountants in connection with the
administration of this Plan shall be deemed to have been taken in good faith.

         7.3      Effective Date. The Plan shall become effective as of January
1, 2003.

         7.4      Governing Law. The Plan shall be construed, administered, and
governed in all respects under the laws of the State of Texas.

         7.5      Severability. If any term, provision, covenant, or condition
of the Plan is held to be invalid, void, or otherwise unenforceable, the rest of
the Plan shall remain in full force and effect and shall in no way be affected,
impaired, or invalidated.

         7.6      Notice. Any notice or filing required or permitted to be given
to the Committee under this Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the principal office of
the Company. Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the dates shown on the postmark on the receipt
for registration or certification.

                                      -18-

<PAGE>

                  IN WITNESS WHEREOF, CenterPoint Energy, Inc. has caused these
presents to be executed by its duly authorized officer in a number of copies,
all of which shall constitute one and the same instrument, which may be
sufficiently evidenced by any executed copy hereof, this _______ day of
September, 2003, but effective as of January 1, 2003.

                                      CENTERPOINT ENERGY, INC.

                                      By:  /s/ David M. McClanahan
                                         ---------------------------------------
                                           David M. McClanahan
                                           President and Chief Executive Officer

ATTEST:

 /s/ Richard Dauphin
--------------------------------
Assistant Secretary

                                      -19-<PAGE>

                                                                    Exhibit 10.3

                            CENTERPOINT ENERGY, INC.
                            SHORT TERM INCENTIVE PLAN

               (As Amended and Restated Effective January 1, 2003)

                                    RECITALS

                  Effective as of January 1, 1999, the Board of Directors of
CenterPoint Energy, Inc., formerly Reliant Energy, Incorporated (the "Company"),
authorized the amendment, restatement and continuation of the Company's prior
annual incentive compensation plan, as in effect on December 31, 1998, in the
form of the Reliant Energy, Incorporated Annual Incentive Compensation Plan (the
"Prior Plan"). The Board of Directors of the Company has authorized the
amendment and restatement of the Prior Plan in the form of, and renamed as, the
CenterPoint Energy, Inc. Short Term Incentive Plan (the "Plan") effective
January 1, 2003 to make administrative clarifications therein and to reflect the
reorganization of the Company effective August 31, 2002.

                  There shall be no termination and no gap or lapse in time or
effect between the Prior Plan and this Plan. The amendment, restatement and
continuation of the Prior Plan in the form of this Plan shall not operate to
exclude, diminish, limit or restrict the payments or continuation of payments of
benefits to Participants under the terms of the Prior Plan as in effect prior to
its amendment, restatement and continuation in the form of this Plan. Except to
the extent otherwise required to reflect the fact that benefits accrued under
the Prior Plan are continued under this Plan, the provisions of this Plan shall
apply only to an employee eligible to participate under this Plan on or after
January 1, 2003.

                  NOW, THEREFORE, effective as of January 1, 2003, the Company
hereby amends, restates in its entirety and continues the CenterPoint Energy,
Inc. Short Term Incentive Plan as follows:

         1.       PURPOSE: The purpose of the Plan is to encourage a high level
of corporate performance through the establishment of predetermined corporate,
Subsidiary or business unit and/or individual goals, the attainment of which
will require a high degree of competence and diligence on the part of those
Employees (including officers) of the Company or of its participating
Subsidiaries selected to participate in the Plan, and which will be beneficial
to the owners and customers of the Company.

         2.       DEFINITIONS: Unless the context otherwise clearly requires,
the following definitions are applicable to the Plan:

                  AWARD: An incentive compensation award generally payable in
         cash granted to a Participant with respect to a particular Plan Year
         pursuant to any applicable terms, conditions and limitations as the
         Committee may establish in order to fulfill the objectives of the Plan.

<PAGE>

                  BOARD OF DIRECTORS or BOARD: The Board of Directors of the
         Company.

                  CODE: The Internal Revenue Code of 1986, as amended from time
         to time.

                  COMMITTEE: The Compensation Committee of the Board of
         Directors.

                  COMPANY: CenterPoint Energy, Inc. or any successor thereto.

                  COMPENSATION: Compensation or eligible earnings during the
         year means the actual base salary paid to a salaried exempt Participant
         during the Plan Year, including vacation, holiday and sick time.
         Eligible earnings exclude all special payments, bonuses, allowances,
         reimbursements, and payments in lieu of overtime. Compensation or
         eligible earnings during the year means the actual gross wages paid to
         a hourly or salaried non-exempt Participant during the Plan Year,
         including vacation, holiday and sick time. Eligible earnings exclude
         all special payments, bonuses, allowances, reimbursements, but include
         overtime pay in a manner consistent with the requirements of applicable
         labor law. Notwithstanding the foregoing, any Participant covered by
         the terms of a collective bargaining agreement shall have his
         Compensation calculated in the manner consistent with the collective
         bargaining agreement, if applicable.

                  EMPLOYEE: An employee of the Company or any of its
         Subsidiaries who is a regular full or part-time employee and who
         regularly works at least 20 hours per week.

                  EMPLOYER: The Company and each Subsidiary which is designated
         by the Committee as an Employer under this Plan.

                  PARTICIPANT: An Employee who is selected to participate in the
         Plan.

                  PERFORMANCE AWARD: An Award made to a Participant pursuant to
         this Plan that is subject to the attainment of one or more Performance
         Goals.

                  PERFORMANCE GOALS: The performance objectives of the Company,
         its Subsidiaries or its business units and/or individual Participants
         established for the purpose of determining the level of Awards, if any,
         earned during a Plan Year.

                  PLAN: This CenterPoint Energy, Inc. Short Term Incentive Plan,
         as amended from time to time.

                  PLAN YEAR: The calendar year.

                  RETIREMENT PLAN: The CenterPoint Energy, Inc. Retirement Plan,
         as amended and restated effective January 1, 1999, and as thereafter
         amended.

                  SAVINGS PLAN: The CenterPoint Energy, Inc. Savings Plan, as
         amended and restated effective April 1, 1999, and as thereafter
         amended.

                                       2
<PAGE>

                  SUBSIDIARY: A subsidiary corporation with respect to the
         Company as defined in Section 424(f) of the Code.

                  A pronoun or adjective in the masculine gender includes the
feminine gender, and the singular includes the plural, unless the context
clearly indicates otherwise.

         3.       PARTICIPATION: The Committee (or its appropriately designated
delegate) shall select the Employees who will be Participants for each Plan
Year. No Employee shall at any time have the right (a) to be selected as a
Participant in the Plan for any Plan Year, (b) if so selected, to be entitled to
an Award, or (c) if selected as a Participant in one Plan Year, to be selected
as a Participant in any subsequent Plan Year. The terms and conditions under
which a Participant may participate in the Plan shall be determined by the
Committee (or its appropriately designated delegate) in its sole discretion.

         4.       ELIGIBILITY: Except as provided below, only Employees who (a)
are employed at least 90 calendar days during the Plan Year, (b) are employed on
the last day of the Plan Year, and (c) are employed on the Payment Date are
eligible for the payment of an Award under the Plan. Days counted to meet the
90-day minimum need not be consecutive days as there may be a break in
employment. Employees covered by a collective bargaining agreement providing for
participation in this Plan are eligible for payments under this Plan only to the
extent of the specific terms contained in the applicable collective bargaining
agreement. Employees covered by a collective bargaining agreement that does not
specifically provide for their participation in this Plan are not eligible for
any payments under this Plan under any circumstances.

                           (1) Retirement, Death or Disability: If, during the
                  Plan Year, a Participant retires on his Retirement Date as
                  defined in the Retirement Plan, dies or terminates employment
                  under circumstances establishing eligibility for disability
                  benefits under the Company's long-term disability plan, then
                  the Participant shall nonetheless receive payment of the Award
                  the Participant would have received had the goals with respect
                  to the Participant's Award been met at the target level based
                  on his Compensation earned prior to the Participant's date of
                  retirement, death or disability. Payments under this Section 4
                  (1) shall be made as soon as practicable following the date of
                  the Participant's retirement, death or disability, but no
                  later than 30 days after the date of the Participant's
                  retirement, death or disability.

                           (2) Termination After Last Day of the Plan Year: If a
                  Participant is an Employee on the last day of the Plan Year
                  and was employed at least 90 days during the Plan Year, but is
                  not an Employee on the Payment Date, then the Participant may
                  receive on the Payment Date, an Award (if any) upon
                  management's recommendation and approval by the Committee.

                                       3
<PAGE>

         5.       PLAN ADMINISTRATION: The Plan shall be administered by the
Committee. All decisions of the Committee shall be binding and conclusive on the
Participants. The Committee, on behalf of the Participants, shall enforce this
Plan in accordance with its terms and shall have all powers necessary for the
accomplishment of that purpose, including, but not by way of limitation, the
following powers:

                  (a)      To select the Participants;

                  (b)      To interpret, construe, approve and adjust all terms,
         provisions, conditions and limitations of this Plan;

                  (c)      To decide any questions arising as to the
         interpretation or application of any provision of the Plan;

                  (d)      To prescribe forms and procedures to be followed by
         Employees for participation in the Plan, or for other occurrences in
         the administration of the Plan;

                  (e)      To establish the terms and conditions of any
         Agreement under which an Award may be earned and paid; and

                  (f)      In addition to all other powers granted herein, the
         Committee shall make and enforce such rules and regulations for the
         administration of the Plan as are not inconsistent with the terms set
         forth herein.

                  No member of the Committee or officer of the Company to whom
the Committee has delegated authority in accordance with the provisions of
Section 5 of this Plan shall be liable for anything done or omitted to be done
by him, by any member of the Committee or by any officer of the Company in
connection with the performance of any duties under this Plan, except for his
own willful misconduct or as expressly provided by statute.

         6.       DELEGATION OF AUTHORITY: The Committee may delegate to the
Chief Executive Officer and to other senior officers of the Company its duties
under this Plan (including, but not limited to, its authority to select
Participants) pursuant to such conditions or limitations as the Committee may
establish.

         7.       AWARDS: The Committee shall determine the terms and conditions
of Awards to be made under this Plan and shall designate from time to time the
individuals who are to be the recipients of Awards. Awards may also be made in
combination or in tandem with, in replacement of, or as alternative to, grants
or rights under this Plan or any other employee plan of the Company or any of
its Subsidiaries, including the plan of any acquired entity. An Award may
provide for the grant or issuance of additional, replacement or alternative
Awards upon the occurrence of specified events. All or part of an Award may be
subject to conditions established by the Committee, which may include, but are
not limited to, continuous service with the Company and its Subsidiaries,
achievement of specific individual and/or business objectives, increases in
specified indices, attainment of specified growth rates and other comparable
measurements of performance. Unless

                                       4
<PAGE>

specified otherwise by the Committee, the amount payable pursuant to an Award
shall be based on a percentage of the Participant's Compensation.

                  An Award may be in the form of a Performance Award. A
Performance Award shall be paid, vested or otherwise deliverable solely on
account of the attainment of one or more pre-established, objective Performance
Goals established by the Committee prior to the earlier to occur of (x) 90 days
after the commencement of such period of service to which the Performance Goal
relates and (y) the lapse of 25% of such period of service (as scheduled in good
faith at the time the goal is established), and in any event while the outcome
is substantially uncertain. A Performance Goal is objective if a third party
having knowledge of the relevant facts could determine whether the goal is met.
Such a Performance Goal may be based on one or more business criteria that apply
to the individual, one or more business units of the Company, or the Company as
a whole. Performance Goals shall be based upon targets established by the
Committee with respect to one or more of the following financial or operational
factors, as applied to the Company or a business unit, as applicable: earnings
per share, earnings per share growth, total shareholder return, economic value
added, cash return on capitalization, increased revenue, revenue ratios (per
employee or per customer), net income, stock price, market share, return on
equity, return on assets, return on capital, return on capital compared to cost
of capital, shareholder value, net cash flow, operating income, earnings before
interest and taxes, cash flow, cash flow from operations, cost reductions, cost
ratios (per employee or per customer), proceeds from dispositions, project
completion time and budget goals, net cash flow before financing activities,
customer growth, total market value, customer satisfaction, and employee safety.
Unless otherwise stated, a Performance Goal need not be based upon an increase
or positive result under a particular business criterion and could include, for
example, maintaining the status quo or limiting economic losses (measured, in
each case, by reference to specific business criteria), and may also be based on
performance relative to the S&P 500 Electric Utilities Panel or other designated
peer group.

                  Prior to the payment of any compensation based on the
achievement of Performance Goals, the Committee must certify in writing that
applicable Performance Goals and any of the material terms thereof were, in
fact, satisfied. The Committee in its sole discretion may decrease the amount
payable pursuant to a Performance Award, but in no event shall the Committee
have discretion to increase the amount payable pursuant to a Performance Award
in a manner inconsistent with the requirements for qualified performance-based
compensation under Code Section 162(m). In interpreting Plan provisions
applicable to Performance Goals and Performance Awards, it is the intent of the
Plan to conform with the standards of Code Section 162(m) applicable to
qualified performance-based compensation, and the Committee in establishing such
Performance Goals and interpreting the Plan shall be guided by such provisions.
Subject to the foregoing provisions, the terms, conditions and limitations
applicable to any Performance Awards pursuant to this Plan shall be determined
by the Committee. No Participant may be granted Performance Awards which will
result in the payment of more than $3,500,000 per Plan Year.

         8.       PAYMENT OF AWARDS: The Committee has sole and absolute
authority and discretion to determine the time and manner in which Awards, if
any, shall be paid under this Plan. Generally, however, the following provisions
may apply:

                                       5
<PAGE>

                  (a)      FORM OF PAYMENT: Generally, payment of Awards shall
         be made in cash and may be subject to such restrictions as the
         Committee shall determine.

                  (b)      DATE OF PAYMENT: Payment of Awards shall be made as
         soon as practicable (as determined by the Committee) following the
         close of the Plan Year (the "Payment Date"), unless otherwise provided
         in Section 4(1).

         9.       ASSIGNABILITY: Unless otherwise determined by the Committee
and provided in the Agreement, no Award or any other benefit under this Plan
shall be assignable or otherwise transferable, except by will or the laws of
descent and distribution. Any attempted assignment of an Award or any other
benefit under this Plan in violation of this Section 9 shall be null and void.

         10.      TAX WITHHOLDING: The Company shall have the right to withhold
applicable taxes from any Award payment and to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for
withholding of such taxes.

         11.      FINALITY OF DETERMINATIONS: Any determination by the Committee
in carrying out or administering this Plan shall be final and binding for all
purposes and upon all interested persons and their heirs, successors, and
personal representatives.

         12.      EMPLOYEE RIGHTS UNDER THE PLAN: No Employee or other person
shall have any claim or right to be granted an Award under this Plan. Neither
the Plan nor any action taken thereunder shall be construed as giving an
Employee any right to be retained in the employ of the Company or an Employer.
No Participant shall have any lien on any assets of the Company or an Employer
by reason of any Award made under this Plan.

         13.      AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION: The Board
may amend, modify, suspend or terminate this Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other purpose permitted
by law, except that (i) no amendment or alteration that would adversely affect
the rights of any Participant under any Award previously granted to such
Participant shall be made without the consent of such Participant and (ii) no
amendment or alteration shall be effective prior to its approval by the
stockholders of the Company; however clause (ii) shall only apply if, and to the
extent, such approval is required by applicable legal requirements.

         14.      OTHER PLANS: The Award payments under this Plan shall be
considered compensation under the Retirement Plan and the Savings Plan.

         15.      GOVERNING LAW: This Plan and all determinations made and
actions taken pursuant hereto, shall be governed by and construed in accordance
with the laws of the State of Texas.

                                       6
<PAGE>

         IN WITNESS WHEREOF, CenterPoint Energy, Inc. has executed these
presents as evidenced by the signature of its duly authorized officer, in a
number of copies, all of which shall constitute but one and the same instrument,
which may be sufficiently evidenced by any such executed copy hereof, this 19th
day of June, 2003, but effective as of January 1, 2003.

                                   CENTERPOINT ENERGY, INC.

                                   By  /s/  David M. McClanahan
                                     -------------------------------------------
                                       David M. McClanahan
                                       President and Chief Executive Officer

ATTEST:

   /s/ Richard Dauphin
---------------------------------
Assistant Secretary

                                       7

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