Income Taxes

9 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective tax rate for the three and nine months ended September 30, 2012 was (144)% and 84%, respectively, compared to 38% and 39%, respectively, for the three and nine months ended September 30, 2011. The change in the effective tax rate for the three and nine months ended September 30, 2012 was primarily due to the unfavorable tax effect of the impairment of non-tax deductible goodwill of $252 million.

The following table summarizes CERC’s unrecognized tax benefits at December 31, 2011 and September 30, 2012:

	December 31, 2011			September 30,  2012
	(in millions)
Unrecognized tax benefits (expense)	$	8		$	(11	)
Portion of unrecognized tax benefits that, if recognized, would reduce the effective income tax rate	6			6
Interest accrued on unrecognized tax benefits	(4		)	(7		)

CERC does not expect the change to the amount of unrecognized tax benefits over the twelve months ending September 30, 2013 to materially impact the financial position of CERC.

CenterPoint Energy’s settlement with the Internal Revenue Service (IRS) for tax years 2008 and 2009 was approved by the Joint Committee on Taxation during the third quarter of 2012. In September 2012, the IRS commenced its examination of CenterPoint Energy’s 2011 consolidated federal income tax return in conjunction with its review of CenterPoint Energy’s 2010 consolidated federal income tax return.