2004: a solid year for core electric, gas and pipeline operations

Even as our senior management team focused much attention in 2004 on the sale of Texas Genco and our true-up case, employees in our core electric, gas and pipeline
operations turned in their best performance in our brief history as CenterPoint Energy.

In Houston, our electric transmission and distribution operations continued to show overall improvement. We increased our core operating income by $33 million over 2003, added nearly 47,000 new metered customers and met system reliability goals after establishing an aggressive special program to cut outage times.

Our natural gas delivery and gas marketing operations also had their best year, raising operating income by $20 million. Spurred by strong growth in the metropolitan areas of Houston and Minneapolis, we added about 45,000 customers. We also achieved high customer satisfaction scores. Our gas marketing business increased sales to electric and gas utilities as well as to large commercial and industrial customers.

Likewise, our pipeline group had its best year ever, improving operating income by $22 million. We connected a record number of new natural gas wells and began an expansion of our pipelines, storage facilities and remote wellhead monitoring services.

2005: positioned for the future

We achieved much in 2004, and we’re excited about our future. In the near term, we will continue to execute our plan to reduce the company’s debt and enhance operations to better serve our customers.

As the financial strength of the company continues to improve, we will actively pursue potential growth opportunities in areas that complement our core energy delivery business. However, we will pursue these opportunities only when we believe they will create sustainable shareholder value.

The CenterPoint Energy management team is committed to achieving our vision and strategy. We believe our accomplishments last year are evidence of this. We met the difficult challenges we faced in 2004 and we feel the company is well positioned to successfully pursue our vision of being recognized as America’s leading energy delivery company … and more.

Thank you for your continued confidence in us.

Milton Carroll
Chairman of the Board

David M. McClanahan
President and Chief Executive Officer