Goodwill and Other Intangibles

Goodwill by reportable business segment as of December 31, 2016 and changes in the carrying amount of goodwill as of December 31, 2017 are as follows:



	December 31, 2016			AEM Acquisition (1)		December 31, 2017
	(in millions)
Natural Gas Distribution	$	746		$	—	$	746
Energy Services	105		(2)	5		110		(2)
Other Operations	11			—		11
Total	$	862		$	5	$	867


(1)	See Note 4.


(2)	Amount presented is net of the accumulated goodwill impairment charge of $252 million.

CERC performs goodwill impairment tests at least annually and evaluates goodwill when events or changes in circumstances indicate that its carrying value may not be recoverable. The impairment evaluation for goodwill is performed by using a two-step process. In the first step, the fair value of each reporting unit is compared with the carrying amount of the reporting unit, including goodwill. The estimated fair value of the reporting unit is generally determined on the basis of discounted cash flows. If the estimated fair value of the reporting unit is less than the carrying amount of the reporting unit, then a second step must be completed to determine the amount of the goodwill impairment that should be recorded. In the second step, the implied fair value of the reporting unit’s goodwill is determined by allocating the reporting unit’s fair value to all of its assets and liabilities other than goodwill (including any unrecognized intangible assets) in a manner similar to a purchase price allocation. The resulting implied fair value of the goodwill that results from the application of this second step is then compared to the carrying amount of the goodwill and an impairment charge is recorded for the difference.

CERC performed its annual goodwill impairment test in the third quarter of each of 2017 and 2016 and determined, based on the results of the first step, that no goodwill impairment charge was required for any reporting unit, which approximate the reportable segments.

The tables below present information on CERC’s other intangible assets recorded in Other non-current assets on the Consolidated Balance Sheets.



	December 31, 2017
	Useful Lives	Gross Carrying Amount		Accumulated Amortization			Net Balance
	(in years)	(in millions)
Customer relationships	15	$	86	$	(21	)	$	65
Covenants not to compete	4	4		(2		)	2
Other	Various	15		(8		)	7
Total		$	105	$	(31	)	$	74



	December 31, 2016
	Useful Lives	Gross Carrying Amount		Accumulated Amortization			Net Balance
	(in years)	(in millions)
Customer relationships	15	$	61	$	(16	)	$	45
Covenants not to compete	4	4		(1		)	3
Other	Various	2		(1		)	1
Total		$	67	$	(18	)	$	49

Amortization expense of intangible assets was $13 million, $4 million and $2 million in the years ended December 31, 2017, 2016 and 2015, respectively. CERC estimates that amortization expense of intangible assets with finite lives will be $12 million, $11 million, $6 million, $6 million and $5 million in the years ending December 31, 2018, 2019, 2020, 2021 and 2022, respectively.