We like to think that when we deposit a dollar at the bank, it goes into a big vault and we can pull out that same dollar at any time. But that¿s not how the U.S. banking system works. Banks take that money and invest it to make money themselves, so cash gets spread around. This, naturally, leads to a big risk: What happens if those investments go sour? Well, you¿d be out of luck. You can¿t get your dollar back.

The Federal Reserve doesn¿t like that scenario, so it prohibits banks from putting all the cash it has on deposit on the line. In fact, the Fed forces banks to keep a portion of their assets at the Federal Reserve itself, to make sure that some of your assets won¿t get squandered if the bank¿s bets go south. These are called ¿reserves,¿ (hence, Federal Reserve. Got it? Good), and usually amount to 10% of the total cash kept in checking accounts.

These reserves are never exactly 10%, and banks like to keep a little extra in reserve ¿ not, as you might think, to make you more comfortable that they¿re in good financial shape, but rather so they can take that excess and lend it to other banks and make money off it. (They¿re banks, they can¿t help themselves.) The rate at which they make these loans is called the Federal Funds rate, which is set by the Federal Reserve¿s Federal Open Market Committee.

When you hear people chattering about how the Fed cut or hiked interest rates, this is what they¿re talking about: the interest rate banks can charge for lending money from their reserves. This begs the question: If these are essentially loans between banks, why is the Fed Funds rate so important for the rest of the economy?

Well, simply put, because loans make the financial world go round. Bank A lends Bank B $10,000 at a Fed Funds rate of 5%. Bank B then lends out $10,000 to a small business at 7%. The small business then takes that money and expands the business and hires new workers. Now someone is employed, Bank B has made interest off the loan, and Bank A is the richer for making it all happen. It¿s perhaps overly simplistic, but you get the idea. When you want the economy to thrive, you make lending cheaper.

Of course, sometimes you don¿t want the economy to thrive. In fact, you might want it to cool down, mostly to avoid money flooding the system and causing inflation. In that case, the Fed raises interest rates, making it difficult to lend or borrow.

Home / Markets / Industries / Energy

Wednesday, June 25, 2008

CenterPoint Energy Gas Transmission Holds Open Season for Firm Capacity On a Proposed Carthage to Perryville Expansion

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HOUSTON, Jun 25, 2008 (PrimeNewswire via COMTEX) ----CenterPoint Energy Gas Transmission Company (CEGT), an indirect, wholly owned interstate natural gas pipeline subsidiary of CenterPoint Energy, Inc. (NYSE:CNP), announced today the start of a non-binding, 31-day open season to gauge market interest in an additional expansion of its 1.5 Bcf/d, 42-inch Carthage to Perryville (Line CP) pipeline. CEGT has successfully completed the first three phases of Line CP and continues to receive expressions of interest in incremental capacity.

"Natural gas production volumes from the Bossier Sands and Barnett Shale in North and East Texas continue to exceed previous forecasts," said Cy Zebot, senior vice president and chief commercial officer for CEGT. "As the Haynesville Shale further develops, Line CP is well-positioned to expeditiously get these supplies to the marketplace. Assuming adequate expressions of interest are received, we're prepared to execute binding precedent agreements and seek necessary governmental authorizations in anticipation of placing the first stages of this proposed project in service as early as the winter of 2009."

Gas production from East Texas remains robust, in addition to the rapidly developing Haynesville Shale. An additional expansion of Line CP would provide these incremental supplies access to the interstate pipelines serving the Midwest and Northeast through CEGT's Perryville Hub(sm) as well as access to markets in the Southeast, through the Southeast Supply Header. Additionally, CEGT's Perryville Hub(sm) will provide direct access to the recently announced Perryville Gas Storage(sm) project being developed near Delhi, La.

CEGT anticipates that such incremental capacity would be provided with additional compression and line looping of Line CP. The specific facilities required will be a function of the location and volume level commitment of potential supply sources. Final pricing determinations will be based on the facility costs, the level of firm commitments and the amount of interest indicated in accessing interstate pipelines connected to CEGT's Perryville Hub(sm). CEGT will consider proposals of any term, but estimates that long-term commitments will be necessary to complete this project.

Written indications of interest should be received by CEGT by 5 p.m. CDT on July 28, 2008. For questions, please contact Kevin Holder, Senior Director Business Development and Project Manager at 713.207.5166, kevin.holder@CenterPointEnergy.com, Kathy Kennedy, Manager Business Development at 713.207.5189, kathy.kennedy@centerpointenergy.com, or Michael Joyce, Director On-System Marketing at 713.207.5114, mike.joyce@centerpointenergy.com. For additional information, visit the CEGT Web site at pipelines.centerpointenergy.com/cegt.html

CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution, competitive natural gas sales and services, interstate pipelines and field services operations. The company serves more than five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. Assets total over $17 billion. With about 8,600 employees, CenterPoint Energy and its predecessor companies have been in business for more than 130 years. For more information, visit the Web site at www.CenterPointEnergy.com.

The CenterPoint Energy logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3588

This news release includes forward-looking statements. Actual events and results may differ materially from those projected. The statements in this news release regarding future events and other statements that are not historical facts are forward-looking statements. Factors that could affect actual results include the financial performance of CenterPoint Energy, the timing and impact of future regulatory decisions, and other factors discussed in CenterPoint Energy's and its subsidiaries' Form 10-Ks for the period ended December 31, 2007, CenterPoint Energy, Inc.'s and its subsidiaries' Form 10-Qs for the quarterly period ended March 31, 2008, and other filings with the Securities and Exchange Commission.

This news release was distributed by PrimeNewswire, www.primenewswire.com

SOURCE: CenterPoint Energy, Inc.

CenterPoint Energy, Inc. Media: Leticia
   Lowe 713.207.7702 Investors: Marianne Paulsen 713.207.6500

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