Energy Transfer 2013 Annual Report Download - page 77

Table of Contents
. The components of our intrastate transportation and storage segment gross margin were as follows:
Years Ended December 31,
2013
2012
Change
Transportation fees $ 491
$550
$(59)
Natural gas sales and other 80
95
(15)
Retained fuel revenues 96
79
17
Storage margin, including fees 48
73
(25)
Total gross margin $715
$797
$(82)
Our 2013 margin decreased as compared to 2012 due to the net impact of the following factors:
• Transportation fees decreased primarily due to lower volumes resulting from the cessation of certain long-term transportation
contracts and lower volumes transported through our pipeline systems as a result of a continued unfavorable natural gas price environment.
From time to time, our marketing affiliate will contract with our intrastate pipelines for long-term and interruptible transportation capacity. Our intrastate
transportation and storage segment recorded intercompany transportation fees from our marketing affiliate of $21 million and $28 million in the years
ended December 31, 2013 and 2012, respectively.
• Margin from natural gas sales and other includes purchased natural gas for transport and sale, derivatives used to hedge
transportation activities, and gains and losses on derivatives used to hedge net retained fuel. Margin from natural gas sales and other decreased primarily
due to a reduction in the margin from derivatives used to hedge transportation activities.
• Retained fuel revenues include gross volumes retained as a fee at the current market price; the cost of consumed fuel is included
in operating expenses. Retention fuel revenue increased primarily due to higher average natural gas spot prices.
Storage margin was comprised of the following:
Years Ended December 31,
2013
2012
Change
Withdrawals from storage natural gas inventory (MMBtu) 36,962,300
12,887,906
24,074,394
Realized margin on natural gas inventory transactions $ (16)
$75
$ (91)
Fair value inventory adjustments 28
27
1
Unrealized gains (losses) on derivatives 8
(59)
67
Margin recognized on natural gas inventory, including related derivatives 20
43
(23)
Revenues from fee-based storage 28
31
(3)
Other costs —
(1)
1
Total storage margin $48
$73
$ (25)
The decrease in our storage margin was principally driven by a decline in the spreads between the spot and forward prices on natural gas we own in the
Bammel storage facility. Additionally, we experienced a decline in fee-based storage revenue of $3 million in 2013 due to the cessation of fixed fee storage
contracts in 2012 and 2013.
 Unrealized losses on commodity risk management activities reflect the net impact
from unrealized gains and losses on storage and non-storage derivatives, as well as fair value adjustments on inventory. We experienced an increase of $58
million in the margin from unrealized gains and losses on commodity risk management activities in 2013 as compared to 2012. For 2013, unrealized gains on
derivatives were $11 million, while unrealized gains from fair value adjustments to storage gas inventory were $28 million. For 2012, unrealized losses from
derivatives of $46 million were offset by fair value adjustments to storage gas inventory of $27 million.
 Intrastate transportation and storage operating expenses decreased primarily due to
employee-related costs.
72