APSC FILED Time: 9/26/ :13:03 AM: Recvd 9/26/ :01:49 AM: Docket U-Doc. 1

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1 Arkansas Public Service Commission Docket Summary Cover Sheet (For all dockets other than Rate Cases, "TD", "C" and "TF" Dockets Must be filed with each new docket filed at the Commission STYLE OF DOCKET: (Style may be changed by Secretary of Commission) Docket Number: IN THE MATTER OF THE APPLICATION OF CENTERPOINT 14- -U ENERGY ARKANSAS GAS FOR APPROVAL OF AN ASSET MANAGEMENT AGREEMENT DOCKET DESIGNATOR: IZI u D A D R D p Nature of Action: (See second sheet) PET!TIONERJlNITIATING PARTY* d/b/a CenterPoint Energy Arkansas Gas ATTORNEYS' NAME, ADDRESS, PHONE, FAX AND Kenny Henderson 401 West Capitol Avenue, Suite 102 (501) (501) fax kenny.henderson@centerpointenergy.com; stephanie.hamrnons@centerpointenergy.com *If the initiating partv is not a jurisdictional utility in Arkansas please provide mailing address. phone. fax and for the company Pursuant to Rule 2.03(b) of the Commission's Rules of Practice and Procedure, please provide name, address, phone, fax, of at least one, but not more than two names to appear on the Service List for this docket Kenny Henderson and 401 West Capitol Avenue, Suite 102 (501) (501) fax kenny.henderson(cijcenterpointenergy.com; stephanie.hammons(a}centerpointenergy.com Wnte a brief statement, limited to the space provided herem descnbmg the case that you are filmg. Please provide enough information to assure that the nature of your docket is clear. By its application in this docket, CenterPoint Energy Arkansas Gas ("CenterPoint Arkansas") is seeking approval of a third Asset Management Agreement ("AMA") between it and Sequent Energy.Management, L.P., related to certain existing Firm Storage Service and Firm Transportation agreements between CenterPoint Arkansas and Enable Gas Transmission, LLC, along with approval of the appropriate treatment of revenues to be derived from the implementation of said AMA. Form completed by: Date: 09/26/2014 Representing: CenterPoint Energy

2 NATURE OF ACTION: Please choose at least one, but no more than three docket types D Accounting D Lifeline/link up D Acquisition/Sales D Market Power D Act 31 of 1981 (Surcharge) D Merger/Transfer D Act 821 of 1987 (Cooperatives Rate Change) D Municipal Franchise Tax D Administrative Procedures D Net Metering D Affiliate Rules D Nuclear Decommissioning D Annual Reports/Assessment DOne Call D Ar Energy Conservation Act (Efficiency Programs) D Pipeline Safety L J Arbitration D Pole attachment issues D Arkansas High Cost Fund D Protective Order D Arkansas Intralata Toll Pool D Public Utility Holding Company Act D Arkansas Universal Service Fund D Public Utility Regulatory Policy Act D ARSI Arkansas Relay Service, Inc. D Purchase Power D Auto Adjustment D Railroad D A voided Cost 1:8] Rates D CCN Cancellation D Refund D CCN Facility D Reports D CCN License D Resource Plan DcECPN D Restructuring D Cost of Gas/Energy seasonal/unscheduled D Retail D Customer release/abandonment D River Crossing D Declaratory Judgment D Regional Transmission Organization D Depreciation D Rulemaking D Dialing/Numbering D Service Quality D Disabilities Act of 1990 D Shielded Outdoor Lighting D Earnings Review D Show Cause D Eligible Telecommunications Carrier Designation D Stranded Costs D Energy Policy Act D Sustainable Energy Resources 1:8] Energy/Fuel Purchasing Practices D Terms and Conditions D EWG Exempt Wholesale Generator D Territory/release/unallocated territory D Extended Area Service D Transition costs D Extension of Telecommunications Facilities Fund D Unbundling D Extraordinary Property Loss D USOA (Uniform System of Accounts) 0FCC D Waiver/Exemption D Finance (Bonds/issue & sell; stock; prom note) D Weather D Grand Gulf D Wholesale D Integrated Resource Planning D Wholesale Rate Adjustment D Interconnection Agreements D Interest/Customer Deposit D Investigation/Inquiry

3 BEFORE THE ARKANSAS PUBLIC SERVICE COMMISSION IN THE MATTER OF THE APPLICATION ) OF CENTERPOINT ENERGY ARKANSAS ) GAS FOR APPROVAL OF AN ASSET ) DOCKET NO. MANAGEMENT AGREEMENT ) APPLICATION OF CENTERPOINT ENERGY ARKANSAS GAS FOR APPROVAL OF AN ASSET MANAGEMENT AGREEMENT d/b/a CenterPoint Energy Arkansas Gas ("CenterPoint Arkansas" or the "Company") submits this application to the Arkansas Public Service Commission (the "Commission") for approval of an asset management agreement. I. INTRODUCTION I. Applicant's name and address is d/b/a CenterPoint Energy Arkansas Gas, 401 W. Capitol Avenue, Suite 102,. 2. Applicant is duly incorporated under the laws of the State of Delaware and is qualified to do business in the State of Arkansas. A copy of Applicant's Articles of Incorporation, including amendments thereto, is presently on file with the Commission and is hereby incorporated by reference. 3. Pursuant to Rule 3.04 of the Commission's Rules of Practice and Procedure, the names, titles, addresses, telephone numbers and addresses of the persons to whom pleadings, notices, and correspondence should be addressed and that should be shown on the official service list are:

4 Kenny W. Henderson Associate General Counsel 401 W. Capitol Ave., Suite 102 (501) and Assistant General Counsel 401 W. Capitol Ave., Suite 102 (501) CenterPoint Arkansas is a "public utility" as defined by Act 324 of 1935, as amended, which is codified at Arkansas Code Ann et seq. and, as such, is subject to the jurisdiction of the Commission. II. THE ASSET MANAGEMENT AGREEMENT 5. On August 11, 2009, CenterPoint Arkansas and Sequent Energy Management, L.P. ("Sequent") entered into an AMA that was subsequently approved by this Commission in Order No. 5 of Docket No U (the "Original AMA"). On September 8, 2011, a second AMA was entered into with Sequent and subsequently approved by the Commission in Order No. 5 of Docket No U (the "Second AMA"). The term of the second AMA expires on March 31,

5 6. On September 25, 2014, CenterPoint Arkansas and Sequent entered into a third Asset Management Agreement (the "Third AMA") concerning certain gas storage and transportation contracts on the Enable Gas Transmission, LLC ("EGT") system The Third AMA has a term of April 1, 2015 through March 31, 2018 and is intended to continue the existing arrangement of the parties, subject to the terms and conditions of the Third AMA. 8. In general, under the Third AMA, CenterPoint Arkansas will release to Sequent its capacity under certain gas storage and transportation contracts on the EGT system, Sequent will manage gas supply and delivery arrangements for the Company, and when the released capacity is not needed to serve the Company's ratepayers, Sequent may enter into transactions that maximize the value of the pipeline capacity and negotiate beneficial transactions in the gas commodity markets. 9. The Third AMA will continue to provide CenterPoint Arkansas the ability to reduce costs that it normally passes on to customers, including a reduction in rate base associated with storage effective with its next rate case. As recognized by the Federal Energy Regulatory Commission in Order No. 712, arrangements such as the Third AMA will also generally provide efficiency benefits to the natural gas market. 10. In addition to these lower costs and market efficiencies, CenterPoint Arkansas will receive from Sequent annually a share of the net third-party revenues associated with the assets managed under the Third AMA, with a guaranteed minimum payment each year. 11. Consistent with Commission treatment of capacity releases under the Company's existing contracts with EGT and consistent with Commission treatment of revenues received under the Original and Second AMAs, CenterPoint Arkansas proposes to split the revenue from 1 Formerly "CenterPoint Energy Gas Transmission." 3

6 the Third AMA on a 50/50 basis, with the Company retaining 50% below-the-line and with the remaining 50% being credited to customers through the Company's Gas Supply Rate rider. 12. In this Application, CenterPoint Arkansas seeks Commission approval of both the Third AMA and the proposal to share the AMA revenue with its customers. 13. In support of this Application, CenterPoint Arkansas has included the direct testimony and exhibits of two witnesses. Bruce Coogler Thomas D. Stevens Mr. Coogler, Division Vice President of Gas Supply, discusses AMAs generally, summarizes the competitive bid process undertaken by CenterPoint Energy, and summarizes the key provisions of the Third AMA. Mr. Stevens, Manager of Regulatory Affairs for Arkansas and Oklahoma, explains the Company's proposal to continue to share with its ratepayers the revenues received from Sequent during the term of the Third AMA. III. CONCURRENT MOTION FOR PROTECTIVE ORDER 14. Certain portions of the testimony and exhibits of Messrs. Coogler and Stevens are held by the Company as confidential. Accordingly, redacted versions of the Direct Testimony and Exhibits of Mr. Coogler and Mr. Stevens, including a redacted copy of the Third AMA, are being filed concurrently herewith. 15. Concurrent with the filing of the Application, CenterPoint Arkansas has moved for issuance of an interim protective order so that unredacted versions of the Direct Testimony, including the Third AMA, may be filed under seal and provided to the parties who sign appropriate Affidavits of Non-Disclosure pursuant to an Interim Protective Order issued by the Commission. 4

7 IV. REQUEST FOR EXPEDITED REVIEW OF APPLICATION 16. The term of the Third AMA provides that either party may terminate the Third AMA if Commission approval is not received before February 13, In addition, approval before that date may result in additional proceeds to the ratepayers and the Company from the Third AMA. Accordingly, the Company requests expedited consideration of its Application. V. CONCLUSION Based on the foregoing, CenterPoint Arkansas requests that the Commission expeditiously approve this Application, including (1) the Third AMA and (2) the proposed revenue sharing between CenterPoint Arkansas and its ratepayers. Respectfully submitted, Relill W~ Hende 7oli Arkansas Bar No Arkansas Bar No West Capitol Avenue, Suite 102 Little Rock, Arkansas (501) (501) fax COUNSEL FOR CENTERPOINT ENERGY RESOURCES CORP. D/B/A CENTERPOINT ENERGY ARKANSAS GAS 5