Energy Transfer 2012 Annual Report Download - page 160

F - 15
Our interstate transportation and storage operations have a concentration of customers in the electric and gas utility industries
as well as natural gas producers. This concentration of customers may impact our overall exposure to credit risk, either
positively or negatively, in that the customers may be similarly affected by changes in economic or other conditions. From
time to time, specifically identified customers having perceived credit risk are required to provide prepayments or other forms
of collateral. Management believes that the portfolio of receivables, which includes regulated electric utilities, regulated local
distribution companies and municipalities, is subject to minimal credit risk. Our interstate transportation and storage operations
establish an allowance for doubtful accounts on trade receivables based on the expected ultimate recovery of these receivables
and consider many factors including historical customer collection experience, general and specific economic trends and
known specific issues related to individual customers, sectors and transactions that might impact collectability.
We enter into netting arrangements with counterparties of derivative contracts to mitigate credit risk. Transactions are confirmed
with the counterparty and the net amount is settled when due. Amounts outstanding under these netting arrangements are
presented on a net basis in the consolidated balance sheets.
Inventories
Inventories consist principally of natural gas held in storage, crude oil, petroleum and chemical products . Natural gas held
in storage is valued at the lower of cost or market utilizing the weighted-average cost method. The cost of crude oil and
petroleum and chemical products is determined using the last-in, first out method. The cost of appliances, parts and fittings
is determined by the first-in, first-out method.
Inventories consisted of the following:
December 31,
2012 2011
Natural gas and NGLs, excluding propane $ 334 $ 144
Propane — 87
Crude Oil 418 —
Refined Products 572 —
Appliances, parts and fittings and other 171 76
Total inventories $ 1,495 $ 307
We utilize commodity derivatives to manage price volatility associated with our natural gas inventory. Changes in fair value
of designated hedged inventory is recorded in inventory on our consolidated balance sheets and cost of products sold in our
consolidated statements of operations.
Exchanges
Exchanges consist of natural gas and NGL delivery imbalances (over and under deliveries) with others. These amounts, which
are valued at market prices or weighted average market prices pursuant to contractual imbalance agreements, turn over monthly
and are recorded as exchanges receivable or exchanges payable on our consolidated balance sheets. These imbalances are
generally settled by deliveries of natural gas or NGLs, but may be settled in cash, depending on contractual terms.
Other Current Assets
Other current assets consisted of the following:
December 31,
2012 2011
Deposits paid to vendors $ 41 $ 66
Prepaid and other 293 114
Total other current assets $ 334 $ 180
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-
line method over the estimated useful or Federal Energy Regulatory Commission (“FERC”) mandated lives of the assets, if
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