Central completed four expansion projects in 1997. Shown is one of two new compressor stations that are allowing us to move more gas from the Rockies to our Mid-continent markets.

1998 Capital Expenditures — $52 million

Central’s operating profit increased 27 percent in 1997, due primarily to a gain from the sale-in-place of natural gas from a decommissioned storage field, new firm-transportation contracts and reduced operating and administrative expenses.

Key Points
*We renewed key contracts that were due to expire in 1997, retaining 78 percent of the total volumes involved. We expect to market the remaining capacity, possibly at
discounted rates, in 1998.

*An ongoing cost-reduction effort reduced expenses in 1997. Employee-led initiatives continued to create substantial savings.

*Setting aside some unresolved issues, the FERC approved the settlement of our 1995 rate case. On the remaining issues, we will urge the FERC to overturn administrative law judge decisions involving corporate-overhead and pension costs.

*We are appealing two decisions handed down from the FERC in 1997. One involves capital structure, rate of return, cost of debt and environmental cleanup cost issues related to our 1993 rate case. The other involves a prudence challenge to certain gas supply contracts (see Note 18, page 68).

*We completed four expansion projects resulting in additional firm-transportation contracts. These contracts, totaling 71 million cubic feet a day (MMcfd), will have a full-year impact on 1998 results.

Outlook
*Central expects operating profit in 1998 to decline slightly, primarily due to the absence of the storage-field gas gain and the effects of capacity turnback amid intense competition. Our challenge is to continue renewing contracts, lowering costs and generating new business.

*Capital expenditures in 1998 are expected to total $52 million. Of that amount, about $20 million will go toward system expansions. The rest will be spent on mandatory and efficiency projects.