Good morning, and welcome to CenterPoint Energy's Second Quarter 2014 Earnings Conference Call with Senior Management. [Operator Instructions] I will now turn the call over to Carla Kneipp, Vice President of Investor Relations. Miss Kneipp?

Thank you, Regina. Good morning, everyone. Welcome to our second 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 second quarter 2014 results and provide highlights on the other key areas. Although -- excuse me, 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 on the Investor Relations 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 that 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. I would also like to remind you that our earnings press release and Form 10-Q, as well as updated debt maturity and equity return amortization schedules, have been posted on our website, centerpointenergy.com, under the Investors section. These materials are for informational purposes, and will not be referred to during prepared remarks. Also, any projections or forward-looking statements made during this call are subject to the cautionary statements on forward-looking information in the company's filing with the SEC. With the formation of Enable Midstream Partners, the way we present our financial results have changed. As a result, we will refer to our equity investment in Enable as Midstream Investment, 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, August 13. To access the replay, please call (855) 859-2056 or (404) 537-3406 and enter the conference ID number 65068077. You can also listen to an online replay on our website, and we will archive the call for at least 1 year. And with that, I will now turn the call over to Scott.

Thank you, Carla. Good morning, everyone, and thank you for joining us on CenterPoint Energy's second quarter 2014 earnings conference call. I would first like to thank those of you who joined us either in person or on the webcast for our June 30th Analyst and Investor Day. At that event, we shared our optimism for the future based on growth in the organic investment opportunities in our utility service territories. We believe we are well-positioned to provide our customers and the communities we serve highly reliable and safe utility service. Further, we believe our investment in Enable Midstream Partners creates additional shareholder value as they realize growth opportunities. For those not able to participate, let me reiterate a few key messages from the meeting. We introduced a $1.2 billion potential upside to our current 5-year estimated capital plan of $6.2 billion. We shared that while our current plan is expected to generate annualized rate-based growth of 7% to 8% from 2014 to 2018, our potential upside capital investment could increase that annual growth rate to 9% to 10%. Our current plan supports utility earnings compound annual growth of 4% to 6%, and a potential upside capital investment would allow us to more confidently target the upper end of that range. We are currently reviewing our 5-year strategic plan and we'll formally update or revise capital investment schedule beginning or during our fourth quarter earnings call. Also, at our Analyst Day meeting, Lynn Bourdon and Rod Sailor of Enable Midstream Partners discussed their company's value proposition and reviewed the key drivers that will support sustainable growth in their distributable cash. Each of these elements contributes to our expectation of providing CenterPoint Energy shareholders a stable dividend with growth of 8% to 10% annually over the next 3 years. Our investment…

Thank you, Scott. Houston Electric had a solid second quarter, both operationally and financially, despite milder weather. Quarter operating income was $115 million, compared to $131 million in 2013. Higher earnings from customer growth were more than offset by the impact of milder weather, as well as higher O&M and depreciation expense. Houston Electric's earnings continue to benefit from our growing customer base. Since this time last year, we added more than 48,000 metered customers which contributed approximately $7 million of operating income this quarter. We continue to expect 2% annual customer growth into the foreseeable future. Electricity consumption in Houston continues to grow, and for the 12 months ended June 30, weather-normalized residential throughput was up slightly over 2% when compared to the previous 12 months. Over the past several years, our residential throughput increase had been consistent with our residential customer growth. On a per customer basis, our usage has been more or less flat. As I mentioned, Houston Electric experienced mild weather this quarter. Compared to the same quarter last year, operating income was down $10 million due to weather-related usage. For the first half of this year, operating income is lower by $3 million when compared to normal weather. Our O&M expense was higher compared to the second quarter of last year, primarily because of 2 items. First, transmission investment cost in Texas is recovered from all electric distribution service providers. In the quarter, Houston Electric incurred approximately $46 million more of allocated transmission cost, which we refer to as TCOS expense, than in the same period last year. These costs are largely offset by the corresponding increase in transmission revenues. Second, as we stated during the year end 2013 earnings call, we expected our operational expenses to be higher this year as we accelerate specific…

Thank you, Tracy. As a reminder, our gas operations business includes both our natural gas utilities and our Energy Services business. Second quarter 2014 operating income for gas operations was $41 million, $13 million more than last year. Of this, $30 million was from our natural gas utilities, and $11 million was from Energy Services. Last year, operating income in the second quarter was $28 million, with $25 million from the natural gas utilities and $3 million from Energy Services. Our natural gas utilities had a good quarter, benefiting from an improved rate and continued customer growth. Rate increases improved our operating income approximately $10 million, compared to the second quarter of 2013, driven by a PUC decision on our Minnesota rate case and several Texas GRID filings. Weather and usage, net of our weather hedge and the weather normalization adjustments riders, contributed approximately $3 million. Weather in the quarter was colder than normal, but not as cold as the second quarter of 2013. However, we exceeded our winter hedge cap from the first quarter this year, so we were able to fully benefit from the colder-than-normal weather in the second quarter. We remain very pleased with customer growth we continue to see across our footprint, adding approximately 31,000 customers since the second quarter of 2013. This 1% customer growth is heavily influenced by our Metropolitan areas of Minneapolis and Houston. After excluding pass-through expenses, which have offsetting revenues, operational O&M is up about $6 million in the second quarter compared to last year. The majority of our increase is due to additional contract labor utilized in our leak detection and pipeline inspection efforts. In my Analyst Day presentation, I shared that we're working hard to ensure our operational O&M does not exceed a 3% compound annual growth rate over…

Thank you, Joe, and good morning to everyone. I have a few topics to discuss with you this morning, but before doing so, I, too, would like to thank those of you who participated in our Analyst and Investor Day. We believe we have a compelling investment pieces in of delivering solid business and growth, combined with an industry-leading dividend growth rate. Not only will we work diligently to effectively execute our business plan, we will also continue to focus on providing our shareholders and analysts with clear and timely metrics from which to evaluate our progress. Now let me discuss my first topic, liquidity. In line with our objective to maintain appropriate levels of liquidity on reasonable terms, combined with maximum borrowings flexibility, we are in the process of extending our current facility by 1 year with no change to the commitment fees, or to the borrowing cost under the facility. If the extensions are successful, the revolving credit facilities will each have a remaining term of 5 years, expiring in 2019. Now I'd like to discuss our earnings guidance for 2014. This morning, in our second quarter earnings release, we increased our 2014 consolidated earnings estimate to be in the range of $1.14 to $1.21 per diluted share. Our consolidated guidance is bifurcated into 2 ranges: Utility Operations and Midstream Investment. We have assumed a consolidated effective tax rate of 37% and an average share count of 431 million shares. Despite the impact of weather on this quarter, we reaffirmed our utility operations earnings guidance range of $0.72 to $0.76 per diluted share. The utility operations guidance range considers significant variables that may impact earnings such as weather, regulatory and judicial proceedings, throughput, commodity prices, effective tax rates and financing activities. However, the company does not include in…

Thank you, Gary. In asking your questions, I'd 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 ask you to limit yourself to one question and a follow-up. Regina?

[Operator Instructions] Our first question will come from the line of Carl Kirst with BMO Capital.

This is actually Danilo filling in for Carl. A couple of quick follow-up questions. With respect to CE, what was the weather impact, again, for the quarter?

Tracy, you want to take that one?

I will take that one. I'm looking for the number right here. Yes, it's about $10 million for the quarter.

And can you repeat again what the O&M impact was, as well?

About $8 million.

Got you. Okay. I guess most of my other questions have been hit. One quick follow-up, though, for Gary. Now that you sort of are increasing guidance because of Enable, is it fair to say that the dividend growth will sort of change towards that high end of that 8% to 10% range?

Well, I wouldn't say that. I think, at this point, what you're seeing, I think, we are implementing what we've said we -- we really want to look at Enable. As you know, they announced earnings yesterday, they laid out their EBITDA range. And -- which, I think reflects, by the way, what we laid out at the Analyst Day, 8% to 10%. And I think, at this point, we know that's the range. Certainly, our objective -- their objective is to be as profitable as possible, increase their distributions as much as possible. But at this point, I'd say stay with 8% to 10%. And as I said before, our objective is to be at the high end of that, of course, and then we'll look at it each year. I think that's an important thing. Each year, we'll look at what that looks like, and as I said at the Analyst Day, we want to update our -- update you guys on where we see that compounded growth rate. But no change in the range at this point.

We will -- I'll just add onto that. We will continue to evaluate the implications of their forecast as it change, as it may impact our growth rate. But at this point, as Gary said, the growth rate is still 8% to 10%.

Got you. And I guess, a final one before I leave. Any sort of updates on your interest in the Oncor assets? There've been a lot of parties, obviously, interested in it. Do you guys sort of still are looking at that? Or how should we think about that?

I think we've mentioned several times. First of all, our top priority is organic investment, right? We're going to focus on that and making sure that Enable is properly governed and they're doing what they need to. But as we've said before, we have an interest in M&A if it meets our strategic criteria. You've asked specifically about Oncor. I think, in the past, we've commented that from a strategic standpoint, there's good industrial logic for it. But as this process unfolds, as we look at this, we're only going to do something if it makes sense, it meets our strategic criteria and it creates value for our current shareholders.

Our next question will come from the line of Ali Agha with SunTrust.

Scott, you guys have raised your '14 guidance based on Enable's numbers being put out there. As you know, they put out both '14 and '15 numbers. Are their '15 numbers higher than what you had assumed in your outlook as well?

Well we, as you know -- this is Gary. Good morning, Ali. We've not provided '15 guidance. I think, directionally, we're frankly very pleased with what they laid out. I think you can see they're investing a significant amount of capital, and I think that they're very clear to the market in letting you guys know the amount of capital that they're going to execute on. But in terms of 2015, we're not providing guidance at this point. But certainly, our expectations is that they would increase their EBITDA growth and distributable cash flow in 2015, and we expect them to continue beyond that. So I'm going to call it in line with our expectations, but in terms of specific guidance, we'll give that first quarter of next year.

Okay. And my second question, I guess, Gary, for you, as well. Kind of 2 parts. One is that's just a logistic point, the 37% tax rate, is that fair for modeling purposes to assume that to be consistent in future years as well?

I think it is. It's subject to, I would say, some type of change in the tax rates. But, yes, I think you could use it for now. I mean, I think that's a fair rate to use, yes.

Okay. And just the real question I wanted to ask you is if that growth CapEx does come to fruition in your regular businesses, can you remind us, would that cause you to think about raising equity to meet your CapEx plans if you do spend that extra amount as well?

Well, in terms of the -- let me maybe back up and review our financing plan, is to thoughtfully use our debt capacity, and that's what we're doing. We ended the year with debt to total cap of about 53.5%. If you look at the end of the quarter, it's about 55.7%. So we have quite a bit of runway in front of us to thoughtfully use our debt capacity, to the extent that Joe and Tracy are able to execute on accretive growth capital above and beyond that. Frankly, we'd be delighted to get feather in some equity to support that. But we'll, first of all, thoughtfully use our debt capacity that we work diligently to have the flexibility to use over these past few years. Hope that's helpful.

Our next question will come from the line of Matt Tucker with KeyBanc Capital Markets.

First question on the stronger guidance for Enable. Can you just talk a little bit more specifically about what's driving your -- the stronger view versus what you were assuming previously? And has it been more the performance to date or the second half outlook?

I'll take this. Matt, I think it's really -- again, obviously, you can look at their release in terms of the details, but I think this is what we've expected, and it's really around, as they have -- are able to drive more transparency around their outlook. Certainly, commodity prices were moving in their favor to some extent. I think that's weakened some. And as I said, we really need to follow what they laid out, but as you can see, they laid out yesterday I think a really strong CapEx plan and growth in their EBITDA. So we'll follow them. And I think it's pretty well in line with what we expected. And again, as they became public, we understood where they were going to be on SESH, in our ownership and those things, to be able to just fine-tune, if you will, their guidance at this point.

And then I, I guess, had a similar question on the reaffirmed Utility Operations guidance. Are there any moving pieces in terms of the stronger, weaker assumptions there for the 3 segments included in that?

I'd say -- on the Utility side, we see -- certainly, we see some growth. There's some strength in the growth space, very strong. We had the weather downturn, as you noted, in the actuals for the quarter, which has kind of negatively impacted that. But overall, we're still very confident with what we see in our ability to deliver on that range, given our ability to constructively manage O&M and take advantage of the growth that we see happening in the area.

Regina, we don't have anybody else in the queue, correct?

None at this time.

Okay. With that, we will now end the call. Thank you very much for participating today. We appreciate your support, and have a nice day.