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CenterPoint Energy Reports Fourth Quarter And Full Year 2008 Earnings

Houston, TX – February 25, 2009  - CenterPoint Energy, Inc. (NYSE: CNP) today reported net income of $87 million, or $0.25 per diluted share, for the fourth quarter of 2008 compared to $108 million, or $0.32 per diluted share, for the same period of 2007.

Net income for the year 2008 was $447 million, or $1.30 per diluted share, compared to $399 million, or $1.17 per diluted share, for 2007.

“I am pleased with the overall financial results that we are reporting today,” said David M. McClanahan, president and chief executive officer of CenterPoint Energy.  “Our interstate pipelines and field services businesses turned in record performances, and our electric and natural gas utilities reported solid results. Although we expect 2009 to be a more challenging year, we continue to benefit from the stability of our regulated utility operations and from the high levels of activity in a number of the producing areas served by our pipelines and field services businesses.”

OPERATING INCOME BY SEGMENT

Electric Transmission & Distribution

The electric transmission & distribution segment reported operating income of $88 million for the fourth quarter of 2008, consisting of $55 million from the regulated electric transmission & distribution utility operations (TDU) and $33 million related to transition bonds.  Operating income for the fourth quarter of 2007 was $104 million, consisting of $65 million from the TDU, $29 million related to transition bonds, and $10 million from the competition transition charge (CTC).  In February 2008, the company monetized the remaining true-up balance resulting in the discontinuance of the CTC.  Operating income for the TDU declined primarily due to higher transmission costs billed to the company from other transmission providers.

Operating income for the year 2008 was $545 million, consisting of $407 million from the TDU, $133 million related to transition bonds, and $5 million from the CTC.  Operating income for 2007 was $561 million, consisting of $400 million from the TDU, $119 million related to transition bonds, and $42 million from the CTC.  Operating income for the TDU increased as a result of customer growth of nearly 31,000 customers since December 2007, increased usage, in part due to favorable weather, proceeds from a land sale, and a refund of prior years’ state franchise taxes.  These positive impacts were partially offset by higher transmission costs and other operating expenses, and the impacts from Hurricane Ike.  Operating income for 2007 included a $17 million favorable settlement related to the final fuel reconciliation of the formerly integrated electric utility.  As a result of revisions to the Texas State Franchise Tax Law, the Texas margin tax, which was reported as operating expense prior to 2008, is now being reported as income tax and does not impact operating income.

Natural Gas Distribution

The natural gas distribution segment reported operating income of $96 million for the fourth quarter of 2008 compared to $89 million for the same period of 2007.  Operating income benefited from continued customer growth of nearly 25,000 since December 2007 and lower employee-related expenses.

Operating income for the year 2008 was $215 million compared to $218 million for 2007.  Operating income for 2008 declined primarily due to reduced usage and higher expenses, partially offset by rate increases and customer growth.

Interstate Pipelines

The interstate pipelines segment reported operating income of $66 million for the fourth quarter of 2008 compared to $71 million for the same period of 2007.  Higher income from the Carthage to Perryville pipeline and increased transportation services was offset by reduced ancillary services and higher operation and maintenance expenses.  Operating income for the fourth quarter of 2007 included favorable settlements of certain state tax issues and a write-off of project development costs.

Operating income for the year 2008 was $293 million compared to $237 million for 2007.  Higher income from the Carthage to Perryville pipeline and increased transportation and ancillary services was partially offset by higher operation and maintenance expenses.  Operating income for 2008 included an $18 million gain from the sale of two storage development projects and a $7 million write-down associated with pipeline assets removed from service.  Operating income for 2007 included $8 million from the favorable settlement of certain state tax issues. 

In addition to operating income, this business had equity income of $36 million for 2008 and $6 million for 2007, including $33 million for 2008 and $6 million for 2007 of pre-operating allowance for funds used during construction from its 50 percent interest in the Southeast Supply Header, a new pipeline that went into service in September 2008.  

Field Services

The field services segment reported operating income of $26 million for the fourth quarter of 2008 compared to $24 million for the same period of 2007.  Operating income increased primarily from higher throughput and increased ancillary services, partially offset by lower commodity prices and higher operation and maintenance expenses.

In addition to operating income, this business had equity income of $3 million in each of the fourth quarters of 2008 and 2007 from its 50 percent interest in a gas processing plant.  

Operating income for the year 2008 was $147 million compared to $99 million for 2007. Operating income increased primarily from higher throughput, increased ancillary services and higher commodity prices, partially offset by higher operation and maintenance expenses.  Operating income for 2008 also included $17 million associated with the sale of non-strategic assets and the settlement of a contractual dispute, and a gain of $7 million associated with system imbalances.

Equity income from the jointly-owned gas processing plant was $15 million for 2008 compared to $10 million for 2007.

Competitive Natural Gas Sales and Services

The competitive natural gas sales and services segment reported operating income of $26 million for the fourth quarter of 2008 compared to $19 million for the same period of 2007.  Operating income increased due to more favorable locational and seasonal price differentials, which were partially offset by higher operating expenses.  Operating income for the fourth quarter of 2008 included a $6 million write-down of natural gas inventory to the lower of average cost or market.  Operating income for the fourth quarter of 2007 included gains of $2 million resulting from mark-to-market accounting for derivatives used to lock in economic margins of certain forward natural gas sales. 

Operating income for the year 2008 was $62 million compared to $75 million for 2007.  Operating income declined due to lower gains on sales of gas from inventory and higher operating expenses, partially offset by more favorable locational and seasonal price differentials.  Operating income for 2008 included inventory write-downs of $30 million compared to inventory write-downs of $11 million for 2007.  Operating income for 2008 included gains of $13 million resulting from mark-to-market accounting compared to mark-to-market charges of $10 million for 2007. 

DIVIDEND DECLARATION

On January 22, 2009, CenterPoint Energy’s board of directors declared a regular quarterly cash dividend of $0.19 per share of common stock payable on March 10, 2009, to shareholders of record as of the close of business on February 16, 2009.  This represents more than a four percent increase over the $0.1825 per common share quarterly dividends paid by the company in 2008.   

OUTLOOK FOR 2009

CenterPoint Energy expects diluted earnings per share for 2009 to be in the range of $1.05 to $1.15.   This guidance takes into consideration an estimated increase in non-cash pension expense of $0.16 per diluted share.  Additionally, the guidance takes into consideration various economic and operational assumptions related to the business segments in which the company operates.  The company has made certain assumptions regarding the timing and cost of certain financing activities and the impact to earnings of various regulatory proceedings, including

recovery of costs associated with Hurricane Ike.  The company cannot predict the ultimate outcome of any of those proceedings.  In providing this guidance, the company has not projected the impact of any changes in accounting standards, any impact from acquisitions or divestitures, the timing effects of mark-to-market or inventory accounting in our competitive natural gas sales and services business, or the outcome of the TDU’s true-up appeal. 

FILING OF FORM 10-K FOR CENTERPOINT ENERGY, INC.

Today, CenterPoint Energy, Inc. filed with the Securities and Exchange Commission (SEC) its Annual Report on Form 10-K for the fiscal year ended December 31, 2008.  A copy of that report is available on the company’s Web site, www.CenterPointEnergy.com, under the Investors section.  Other filings the company makes at the SEC and other documents relating to its corporate governance can also be found on that site. 

WEBCAST OF EARNINGS CONFERENCE CALL

CenterPoint Energy’s management will host an earnings conference call on Wednesday, February 25, 2009, at 10:30 a.m. Central time or 11:30 a.m. Eastern time.  Interested parties may listen to a live audio broadcast of the conference call at www.CenterPointEnergy.com.  A replay of the call can be accessed approximately two hours after the completion of the call and will be archived on the Web site for at least one year.

CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution, competitive natural gas sales and services, interstate pipelines, and field services operations.  The company serves more than five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. Assets total over $19 billion.  With about 8,800 employees, CenterPoint Energy and its predecessor companies have been in business for more than 130 years.  For more information, visit the Web site at www.CenterPointEnergy.com.

This news release includes forward-looking statements.  Actual events and results may differ materially from those projected.   The statements in this news release regarding future financial performance and results of operations and other statements that are not historical facts are forward-looking statements.  Factors that could affect actual results include the timing and outcome of appeals from the true-up proceedings, the timing and impact of future regulatory, legislative, and IRS decisions, effects of competition, weather variations, changes in CenterPoint Energy’s or its subsidiaries’ business plans, financial market conditions, the timing and extent of changes in commodity prices, particularly natural gas, the impact of unplanned facility outages, and other factors discussed in CenterPoint Energy’s Form 10-K for the period ended December 31, 2008, and other filings with the SEC.