Energy Transfer 2012 Annual Report Download - page 197

F - 52
Certain of Southern Union’s derivative instruments contain provisions that require Southern Union’s debt to be maintained
at an investment grade credit rating from each of the major credit rating agencies. If Southern Union’s debt were to fall below
investment grade, Southern Union would be in violation of these provisions, and the counterparties to the derivative instruments
could potentially require Southern Union to post collateral for certain of the derivative instruments. The aggregate fair value
of Southern Union's derivative instruments with credit-risk-related contingent features that are in a net liability position at
December 31, 2012 was $4 million, all of which were included in the disposal group held for sale liabilities at December 31,
2012.
For financial instruments, failure of a counterparty to perform on a contract could result in our inability to realize amounts
that have been recorded on our consolidated balance sheet and recognized in net income or other comprehensive income.
Derivative Summary
The following table provides a balance sheet overview of the Partnership’s derivative assets and liabilities as of December 31,
2012 and 2011:
Fair Value of Derivative Instruments
Asset Derivatives Liability Derivatives
2012 2011 2012 2011
Derivatives designated as hedging instruments:
Commodity derivatives (margin deposits) $ 8 $ 77 $ (10) $ (1)
8 77 (10)(1)
Derivatives not designated as hedging instruments:
Commodity derivatives (margin deposits) 110 227 (116)(251)
Commodity derivatives 35 1 (43)(5)
Interest rate derivatives 55 36 (223)(117)
200 264 (382)(373)
Total derivatives $ 208 $ 341 $ (392) $ (374)
The commodity derivatives (margin deposits) are recorded in “Other current assets” on our consolidated balance sheets. The
remainder of the derivatives are recorded in “Price risk management assets/liabilities”. As of December 31, 2012 commodity
derivative assets of $1 million and commodity derivatives liabilities of $8 million were recorded in "Non-current assets held
for sale" and "Current liabilities held for sale" on our consolidated balances sheet. In addition to the above derivatives, $7
million in option premiums included in “Price risk management liabilities” as of December 31, 2012 will amortize in 2013.
We disclose the non-exchange traded financial derivative instruments as price risk management assets and liabilities on our
consolidated balance sheets at fair value with amounts classified as either current or long-term depending on the anticipated
settlement date.
The following tables summarize the amounts recognized with respect to our derivative financial instruments for the periods
presented:
Change in Value Recognized in OCI on
Derivatives
(Effective Portion)
Years Ended December 31,
2012 2011 2010
Derivatives in cash flow hedging relationships:
Commodity derivatives $ 8 $ 19 $ 61
Interest rate derivatives — — (1)
Total $ 8 $ 19 $ 60
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