Energy Transfer 2012 Annual Report Download - page 30

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retail outlets, some of which are well-recognized national or regional retail systems. The number of competitors varies depending
on the geographical area. It also varies with gasoline and convenience store offerings. The principal competitive factors affecting
our retail marketing operations include gasoline and diesel acquisition costs, site location, product price, selection and quality,
site appearance and cleanliness, hours of operation, store safety, customer loyalty and brand recognition. We compete by pricing
gasoline competitively, combining retail gasoline business with convenience stores that provide a wide variety of products, and
using advertising and promotional campaigns. We believe that we are in a position to compete effectively as a marketer of refined
products because of the location of our retail network, which is well integrated with the distribution system operated by Sunoco
Logistics.
Credit Risk and Customers
We maintain credit policies with regard to our counterparties that we believe significantly reduce overall credit risk. These policies
include an evaluation of potential counterparties’ financial condition (including credit ratings), requirements for collateral under
certain circumstances, and the use of standardized agreements, which allow for netting of positive and negative exposure associated
with a single or multiple counterparties.
Our counterparties consist primarily of petrochemical companies and other industrials, small to major oil and gas producers,
midstream, and power generation companies. This concentration of counterparties may impact our overall exposure to credit risk,
either positively or negatively, in that the counterparties may be similarly affected by changes in economic, regulatory or other
conditions. Currently, management does not anticipate a material adverse effect on financial position or results of operations as
a result of counterparty non-performance.
Our natural gas transportation and midstream revenues are derived significantly from companies that engage in natural gas
exploration and production activities. Prices for natural gas have been negatively impacted in recent years by economic conditions
and the discovery and development of new shale formations. As a result, many of our customers have been negatively impacted.
We are diligent in attempting to mitigate credit risk relating to our customers.
During the year ended December 31, 2012, none of our customers individually accounted for more than 10% of our consolidated
revenues.
Regulation of Interstate Natural Gas Pipelines. The FERC has broad regulatory authority over the business and operations of
interstate natural gas pipelines. Under the Natural Gas Act (“NGA”), the FERC generally regulates the transportation of natural
gas in interstate commerce. For FERC regulatory purposes, “transportation” includes natural gas pipeline transmission
(forwardhauls and backhauls), storage and other services. The Florida Gas Transmission, Transwestern, Panhandle Eastern,
Trunkline Gas, Tiger, Fayetteville Express and Sea Robin pipelines transport natural gas in interstate commerce and thus each
qualifies as a “natural-gas company” under the NGA subject to the FERC’s regulatory jurisdiction. We also hold certain storage
facilities that are subject to the FERC’s regulatory oversight.
The FERC’s NGA authority includes the power to regulate:
• the certification and construction of new facilities;
• the review and approval of transportation rates;
• the types of services that our regulated assets are permitted to perform;
• the terms and conditions associated with these services;
• the extension or abandonment of services and facilities;
• the maintenance of accounts and records;
• the acquisition and disposition of facilities; and
• the initiation and discontinuation of services.
Under the NGA, interstate natural gas companies must charge rates that are just and reasonable. In addition, the NGA prohibits
natural gas companies from unduly preferring or unreasonably discriminating against any person with respect to pipeline rates or
terms and conditions of service.
Under the terms of a prior settlement, Transwestern was required to file a new NGA Section 4 general rate case no later than
October 1, 2011. However, on September 2, 2011, the FERC granted Transwestern's request for an extension of the filing date
until December 1, 2011. On September 21, 2011, in lieu of filing a new rate case, Transwestern filed a proposed settlement with
the FERC, which was approved by the FERC on October 31, 2011. In general, the settlement provides for the continued use of
Transwestern's currently effective transportation and fuel tariff rates, with the exception of certain San Juan Lateral fuel rates
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