Carla Kneipp – VP & Treasurer Scott Prochazka – President & CEO Tracy Bridge – EVP & President, Electric Division Joe McGoldrick – EVP & President, Gas Division Gary Whitlock – EVP & CFO.

Carl Kirst – BMO Capital Matt Tucker – KeyBanc Capital Ali Agha – SunTrust Robinson Humphrey Charles Fishman – Morningstar.

Welcome to CenterPoint Energy's Third Quarter 2014 Earnings Conference Call with Senior Management. (Operator Instructions). I will now turn the call over to Ms. Carla Kneipp, Vice President and Treasurer. Ms.

Kneipp?.

Thank you, Cia. Good morning, everyone. Welcome to our Third Quarter 2014 Earnings Conference Call. Thank you for joining us today.

Scott Prochazka, President and CEO; Tracy Bridge, Executive Vice President and President of our Electric Division; Joe McGoldrick, Executive Vice President and President of our Gas Division and Gary Whitlock, Executive Vice President and CFO, will discuss our third quarter 2014 results and provide highlights on other key areas.

Also present are other members of management who may assist in answering questions following the prepared remarks. Investors and others should note that we may announce material information using SEC filings, press releases, public conference calls, webcasts and posts to the investors section of our website.

In the future, we will continue to use these channels to distribute material information about the company and to communicate important information about the company, key personnel, corporate initiatives, regulatory updates and other matters.

Information we post on our website could be deemed material, therefore we encourage investors, the media, our customers, business partners and others interested in our company to review the information we post on our website.

Today, management is going to discuss certain topics that will contain projections and forward-looking information that are based on management's beliefs as well as assumptions made by and information currently available to management. These forward looking statements suggest predictions or expeditions and thus are subject to risks or uncertainties.

Actual results could differ materially, based upon factors including weather variations, legislative and regulatory actions, timing and extent of the changes in commodity prices, growth or decline in service territories and other risk factors noted in our SEC filings.

For a reconciliation of the earnings guidance provided in today's call, please refer to our earnings press release which, along with our Form 10-Q and updated debt maturity and equity return amortization schedule, has been posted on our website, centerpointenergy.com under the Investors section.

These materials are for informational purposes and we will not be referring to them during prepared remarks. With the formation of Enable Midstream Partners, the way we present our financial results has changed.

As a result, we will refer to our equity investment in Enable as Midstream Investments and to the remainder of our businesses as Utility Operations. Before Scott begins, I'd like to mention that a replay of this call will be available through Wednesday, November 12. (Operator Instructions). I'll now turn the call over to Scott..

Thank you, Carla. Good morning, everyone and thank you for joining us on CenterPoint Energy's third quarter 2014 Earnings Conference Call. During our Analyst and Investor Day and our last earnings call, we touched upon two themes that are central to our delivering best-in-class utility performance, organic investment and operational expertise.

This morning I'm going to provide an overview of our third quarter performance and then give a brief update on these topics. Our businesses performed well despite the milder weather in the third quarter as compared to last year.

Net income was $143 million or $0.33 per diluted share compared with $151 million or $0.35 per diluted share for the same period in 2013.

On a guidance basis, third quarter 2014 earnings were $0.30 per diluted share of which Utility Operations contributed $0.19 and Midstream Investments contributed $0.11, this compares to $0.33 in the third quarter of 2013 of which Utility Operations contributed $0.21 and Midstream Investments contributed $0.12.

Core operating income from Utility Operations was $203 million this quarter compared to $212 million last year. We continue to benefit from strong economic growth in several of our larger service territories. We've added more than 85,000 customers in the last 12 months.

Year-to-date we have invested $987 million in capital compared with $907 million through the third quarter of last year, an increase of around 9%. We remain on track to invest approximately $1.4 billion in infrastructure by year-end.

Our third quarter equity income from Midstream Investments was $76 million compared to $75 million in the same quarter of 2013, excluding basis difference accretion in both years. Enable held its third quarter earnings call yesterday and we were pleased with the strong results they presented.

We received several questions about the downward pressure our stock price recently experienced associated with market volatility in the MLP sector. Our view is that lower oil prices, negatively impacting the MLP sector, had a disproportionately negative impact on Enable's unit price as well as CenterPoint's stock price.

Enable discussed their commodity exposure during their earnings call yesterday and I would direct you to their published materials for the details. As a reminder, we own 55.4% of Enable's LP units and 40% of the general partner IDRs.

Enable's high quality assets, strong customer relationships, balanced contract mix and solid financial position, make it a valuable component of our portfolio with a manageable risk profile. We expect Enable to continue to be a strong source of value creation in the years to come.

CenterPoint's value proposition remains unchanged, we offer investors exposure to vibrant growing utility service territories coupled with an MLP growth accelerator that allows us to offer an industry leading dividend growth rate.

We believe our valuation should reflect our proportional ownership of Enable, plus an appropriate earnings multiple valuation for our high quality utilities. Overall, we’re pleased with the company's financial and operational performance.

We're executing a robust capital plan and we will update our capital projections on the fourth quarter earnings call. We anticipate those projections to be in line with the capital upside potential presented at our June Analyst Day.

Looking forward, we remain on track to deliver our expected earnings for the year and are well-positioned to achieve long-term growth. We continue to focus on operating safely, serving our growing customer base effectively and running the businesses efficiently. I'll now turn the call over to Tracy to review electric operations..

Thank you, Scott. Houston Electric had a solid third quarter both operationally and financially. Core operating income was $202 million this quarter compared to $207 million in the third quarter of 2013.

Higher earnings from customer growth, higher equity returns, primarily related to true up proceeds and increased right-of-way revenues were more than offset by return to more normal weather and higher O&M expenses. Houston Electric's service territory continues to grow. Since the third quarter last year, we added more than 50,000 metered customers.

We expect this 2% annual customer growth to continue into the foreseeable future providing $25 million to $30 million of incremental revenue each year. Over the past several years, our weather normalized residential throughput increase has been consistent with our residential customer growth, meaning our usage per customer has been more or less flat.

Compared to the same quarter last year operating income related to weather was down $11 million due to a return to more normal weather. This decline was partially offset by a $6 million increase in right-of-way revenues. The full-year 2014 forecast range for right-of-way revenues is $20 million to $30 million.

O&M expense was higher compared to the third quarter of last year, primarily because of $47 million of transmission expenses which has offsetting revenue as well as a $6 million adjustment to our claims liability reserve. Excluding the effects of these items, O&M was up $10 million versus the third quarter of 2013.

This increase was anticipated and driven by specific grid reliability and safety initiatives we have mentioned on previous calls. Before I discuss our capital investment, let me update you on the Houston Import Project.

On October 17, the Texas Public Utility Commission filed an order that denied our appeal of ERCOT's staff decision to split responsibility for the Houston Import Project. We're now concentrating our efforts on planning and constructing our portion of this project.

We estimate our capital investment will be $300 million which is not in our currently published five-year plan. However, this project will contribute to the $750 million to $800 million of capital upside identified at the Analyst Day.

As we’ve shared in the past, we continue to invest capital to enhance reliability, modernize our system and support customer growth. Through the first nine months of this year, we invested $573 million which keeps us on track to invest approximately $780 million of capital by the end of the year.

Our robust capital plan is expected to generate a rate based compound annual growth rate of 7% to 8% with upside potential in the 9% to10% range over the next five years. We're executing our plan and we're well-positioned to continue our strong performance.

We will continue to operate effectively and efficiently as we focus on safety, reliability, growth and customer service. I'll now turn the call over to Joe, who will review Gas Operations..

Thank you, Tracy. Gas Operations performance for the third quarter was in-line with our expectations. We reported a $2 million operating loss for the third quarter comprised of an $8 million loss from our natural gas utilities and a $6 million gain from our Energy Services Business.

By comparison, Gas Operations reported $7 million in operating income in the third quarter of 2013, comprised of a $5 million from our natural gas utilities and $2 million from our Energy Services Business. As anticipated, results were down at our natural gas utilities for the quarter.

However, we continue to expect a solid year as supported by our year-to-date performance. Customer growth at our natural gas utilities continues at a steady 1% growth rate adding 36,000 new customers since the third quarter of 2013, most of the growth came from our Houston and Minnesota service territories.

We also benefited from modest rate relief during the quarter, but the increases were less than those realized in last year's third quarter. O&M at our natural gas utilities increased during the quarter, but we expected this.

For example, timing issues such as pipeline integrity testing in Minnesota occurred disproportionately in the third quarter this year. As always, we continue to look for ways to improve efficiency and hold down O&M without sacrificing safety and reliability. The 3% growth rate I shared that the Analyst Day remains our objective.

Through the first nine months we have invested approximately $380 million of capital and are on track to invest approximately $520 million by year-end. We continue to deploy automated meter reading technology across our footprint and expect to convert all $3.4 million of our meters by year-end 2015.

This technology is an important investment for us as it reduces O&M and improves service to our customers. We also continue to invest capital in pipe replacement, such as our cast-iron and bare steel main replacement program and our Beltline Project in Minneapolis.

As a reminder, our base capital plan is expected to generate a rate based compound annual growth rate of 8% to 9% over the next five years with upside potential in the 9% to 10% range. These investments are improving the safety and efficiency of our system as well as enhancing customer service.

We remain encouraged by our regulators' constructive and collaborative approach to rate recovery for investments that are vital to the safety of our customers and the communities we serve. Turning to Energy Services, we recorded $6 million of operating income in the third quarter which included a $13 million mark-to-market gain.

This compares to $2 million of operating income for the third quarter of 2013 which included a $6 million mark-to-market gain. Year-to-date operating income for Energy Services is $43 million compared to $12 million in 2013. 2014 performance to-date includes a $23 million mark-to-market gain as compared to $7 million in the same period of 2013.

Normalizing for the mark, Energy Services is up approximately $15 million compared with the first nine months of 2013. This business benefited significantly from increased basis and storage spreads during the polar vortex earlier this year.

Despite the increased volatility last winter, our VAR average for 2014 is below $400,000 demonstrating the success we've enjoyed in reducing risk in this business. We are executing our plan well in Gas Operations.

We’ve strong performance to build upon, going into the fourth quarter and will continue to focus on safety, reliability and customer service. I'll now turn the call over to Gary who will provide an update on our financial activities and earnings guidance..

Thank you, Joe and good morning to everyone. I have a few topics to discuss this morning and I would like to start by describing the financial results for Enable Midstream who yesterday reported solid earnings in their first full quarter as a public company following their IPO in May.

Enable's solid financial performance, net of their acquisition of the majority of our interest in the (indiscernible) pipeline, helped to offset the earnings dilution associated with the IPO and a decrease of $2 million in our basis difference accretion.

In addition to equity earnings from Enable, we received cash distributions of $70 million in the third quarter and expect to receive approximately $71 million in the fourth quarter. We are very pleased with the progress the Enable's leadership team continues to make in executing their growth oriented business plan.

My next topic is liquidity; our objective is to maintain appropriate levels of liquidity on reasonable terms combined with maximum borrowing flexibility. On September 9th, we successfully extended our three credit facilities by one year with no change to the commitment fees or the borrowing costs under the facility.

The revolving credit facilities now have a remaining term of five years, expiring in 2019. Now I would like to discuss our earnings guidance for 2014. This morning in our third quarter Earnings Release, we reaffirmed our 2014 consolidated earnings estimate of $1.14 to $1.21 per diluted share.

We reaffirmed the component parts of that range with the Utility Operations range being $0.72 to $0.76 and the Midstream Investments range being $0.42 to $0.45 per diluted share. The Midstream Investment guidance range takes into account Enable's most recent public forecast and the accretion of our basis difference.

In providing this guidance we’ve assumed a consolidated effective tax rate of 37%, a Midstream Investments effective tax rate of 38% and an average share count of 431 million shares.

The Utility Operations guidance range considers significant variables that may impact earnings such as weather, regulatory and judicial proceedings, throughput, commodity prices, effective tax rate and financing activities.

However, the company does not include in its earnings expectations, the impact of any changes in account accounting standards any impact to earnings from the Zen Securities and related stocks, or the timing effects of mark-to-market accounting.

I would also like to reiterate our dividend policy of targeting an annual payout ratio of 60% to 70% of sustainable earnings from our Utility Operations and 90% to 100% of the net after-tax cash distributions we receive from Enable.

As previously discussed, we feel that the expected growth rate in our utility earnings combined with the expected growth in the cash distributions from Enable clearly supports our stated compound annual dividend growth rate objective of 8% to 10% over the next three years.

Finally, let me also remind you of the $0.2375 per share quarterly dividend declared by our Board of Directors on October 21. We believe our dividend actions continue to demonstrate its strong commitment to our shareholders and the confidence of management and the Board of Directors and our ability to deliver sustainable earnings and cash flow.

Thank you for your continued interest in and investment in CenterPoint Energy. And I will now turn the call back over to Carla..

Thank you, Gary. In asking your questions I would like to remind you that Enable related financial and operational performance questions should be directed to Enable Management. We will now open the call to questions. And in the interest of time I would ask you to limit yourself to one question and a follow-up.

Cia?.

(Operator Instructions). The first question will come from Carl Kirst with BMO Capital..

I apologize if this was mentioned earlier on, but Tracy, did you potentially mention what you guys expectation was for a PUC [ph] timing for decision of necessity on the Houston Import Project? Is that still sort of fourth quarter and if so can you be – do you have any sense of refined timeframe on that?.

The briefs were filed by the parties at the PUC last Friday. This is in regard to the NRG Calpine complained about the need for the Houston Import Project, but there will be reply [ph] briefs and we're expecting a decision by the PUC yet this quarter probably in the middle of December..

And then just really sort of a two-part weather question if I could.

One, just wanted when we strip out or when we net out the LDCs with CE, was there a discernible whether delta from normal? And then two, maybe this is a better question for Joe, just given some of the regulatory changes at the LDCs level can you refresh my memory of how you guys are approaching weather hedges for this winter?.

The first question you had about weather, assuming you were asking for the quarter? There is none for gas but CE's down about $11 million for the quarter on a year-over-year basis..

I'm sorry.

That's year-over-year or is that from normal?.

That’s the year-over-year basis..

Do you happen to have what a delta would be from normal?.

From normal weather? Let me see if we can get that for you..

I can get that from Carla offline..

Okay. If we find it, we'll get it to you offline. We'll find it and get it to you then. While they are looking at up I'll answer your hedge question. Yes, we're hedging weather again this winter. It began in October in Minnesota. But we’ve the decoupling pilot go into effect in Minnesota in July of 2015.

That's a three-year pilot program, so if that works as designed we may or may not do any additional financial hedges in the future..

Okay.

I think I misunderstood, so the Minnesota pilot is starting middle of next year, and so basically the hedging if you will is essentially the same approach for instance that you took last winter?.

Correct..

The next question will come from Matt Tucker with KeyBanc Capital..

My first question is on the CapEx opportunity, that the utilities above what's in your current plan.

If you pull the Houston Import Project out of that bucket, could you just comment on where you stand with respect to those upside opportunities? And has there been any movement on specific projects and/or new projects pulled into that upside opportunity?.

So Matt, we're going through our planning process now and that will culminate at the end of the year when we get approval of our budget with our Board. The analysis that we're doing continues to suggest from a growth perspective and from a reliability perspective that the numbers that we've shared with you in June look to be pretty real.

So we'll confirm that after – we will confirm it on our fourth quarter call but as we sit here today we're growing in our confidence that that upside potential is doable..

And then on the Energy Services, it's tracking well ahead of the rate you've been at the past few years.

I know that first quarter was maybe unusually strong, but even the past two, could you just talk a little bit about the environment right now for that business? And are you seeing things get a little more normal than say they have been in the past few years?.

We attribute most of that increase obviously to the polar vortex. We're starting to see customers drop [ph] prices more because of the recent volatility experienced and so we're creating some economic value there.

But we really haven't fundamentally changed our view of that business being a $15 million to $25 million op income business per year, but to the extent that we get another polar vortex or whatever, well absolutely be opportunistic and take advantage of those conditions.

And we've done a good job over the years of really managing costs in that business and derisking it and so we feel like we're in a really good position to continue to grow that at a nice rate..

And then apologies if I missed this, but it looks like your tax rate came in a few hundred basis points below your guidance.

Could you for the quarter just comment on that?.

I think this is just normal quarterly movement. At this point I think Matt, still think about 37% for the full year. At the same time we continue to look at opportunities in terms of optimizing our tax rate but nothing material from that..

The next question will come from Ali Agha with SunTrust..

I wanted to pick up from your opening comments. You talked about the volatility to your stock price given the linkage now that you have with Enable and MLP stocks in general. That's clearly created more volatility to your stock price which is obviously not directly in your control.

So as you look at it from that vantage point, how comfortable are you with this increased volatility given that your core business is still the Utility Operations and investors look at that as a more stable area of investment? So how comfortable are you with that volatility that is now associated with your stock movement?.

Well Ali, in general we prefer to trend towards less volatility rather than more as you well know. But we really think that some of this volatility was just over reaction here, just the market overreacting and I think that Enable is fairly new and people need to better understand their exposure to commodity changes.

And I think it's going to as they learn more I think the relationship will stabilize and we won't see quite the level of volatility we saw this last cycle. We were surprised I think as many people were with the amount of volatility. It didn't seem to make sense to us. You just look at the ownership levels and the actual commodity exposure.

So we are hopeful that education and greater understanding will help reduce that volatility..

Okay. And separately, Scott, can you give us a sense – what is your interest level right now in Oncor? Obviously bidding is ongoing there in the past CenterPoint has been very clear on its interest there.

How are you looking at that opportunity?.

Well, I think you know our practice is not to comment on specific opportunities, but we have mentioned in the past that on Oncor, Oncor itself from a strategic standpoint makes a great amount of sense, just the industrial logic of it. So it's interesting to look at.

We're certainly keeping track of how the whole process is unfolding and we're going to continue to evaluate and look at the process. But we're not going to do anything that wouldn't be in the interest of our existing shareholders..

(Operator Instructions). Our last question will come from Charles Fishman with Morningstar..

Scott, with your permission if I could ask a couple questions to Tracy on Houston Electric. Tracy, did you mention customer growth or expectations? Did I just miss that? In the past you've talked about 2%..

We added 50,000 customers year-over-year by the end of the third quarter. We're continuing on a 2% annual growth rate and we see our average residential use per customer as more or less flat so our total usage tracks our customer growth which is continuing to be about 2%..

Okay. And sort of a related question, I mean your neighbor to the East in Louisiana is experiencing tremendous industrial growth with low energy prices, yet I think of Houston and I still consider it the oil capital of the world.

And obviously with the downward pressure on oil prices, I suspect or at least in the past, that has had a negative impact on the Houston economy and obviously your customer growth.

Has that changed though since the last cycle? Is Houston more balanced with respect to industries that use energy and the low cost energy is actually a benefit?.

We've actually seen a little bit more than 2% growth, more in the 3% range for our commercial and industrial customers along the ship channel and along the coast. There is still considerable interest in liquids and processing and part of our right-of-way margin impact is to allow people to build and get to the coast.

So we're still seeing a pretty robust economy in Houston..

Charles, I'll add to that. I think just the general makeup of Houston now is a much more diverse city than it was a couple decades ago. Clearly, the energy sector is a sizable portion of the economy and the growth here. But there is also a lot of downstream opportunity and there is diversity into the medical area and in other commercial areas.

So while it might have some impact, I don't think it's going to be – there is going to be a devastating impact. In fact I'm not an economist here but some might argue that the reduction in oil price may actually be good for some of the downstream processing. So there could be a balancing effect to that as well..

I'll add onto that, those same dynamics that exist in Louisiana in terms of the petrochemical build-out, those same dynamics exist here in Texas on the Texas Coast as well as in our ship channel. So those same dynamics exist and certainly we will continue to benefit from that in all those respects..

Well that was my thing; I was thinking Houston was a lot more diverse right now. So thanks for the color though..

There are no further questions..

Thank you Cia. Thank you everyone for your interest in CenterPoint Energy. We will now conclude our third quarter 2014 earnings call and have a nice day..

This concludes CenterPoint Energy's third quarter 2014 earnings conference call. Thank you for your participation. You may now disconnect..