Energy Transfer 2015 Annual Report Download - page 92

Table of Contents
Segment Operating Results
Intrastate Transportation and Storage
Years Ended December 31,
2014
2013
Change
Natural gas transported (MMBtu/d) 8,976,978
9,455,878
(478,900)
Revenues $ 2,857
$ 2,452
$ 405
Cost of products sold 2,169
1,737
432
Gross margin 688
715
(27)
Unrealized (gains) losses on commodity risk management activities 21
(39)
60
Operating expenses, excluding non-cash compensation expense (180)
(188)
8
Selling, general and administrative, excluding non-cash compensation expense (27)
(24)
(3)
Adjusted EBITDA related to unconsolidated affiliates 57
57
—
Segment Adjusted EBITDA $ 559
$ 521
$ 38
 Transported volumes decreased due to the reduction of volumes under certain long-term transportation contracts offset by increased volumes due
to a more favorable pricing environment.
. The components of our intrastate transportation and storage segment gross margin were as follows:
Years Ended December 31,
2014
2013
Change
Transportation fees $ 466
$ 491
$ (25)
Natural gas sales and other 100
80
20
Retained fuel revenues 98
96
2
Storage margin, including fees 24
48
(24)
Total gross margin $ 688
$ 715
$ (27)
   For the year ended December 31, 2014 compared to the prior year, Segment Adjusted EBITDA related to our intrastate
transportation and storage segment increased due to the net impacts of the following:
• an increase of $31 million in storage margin (excluding changes in unrealized losses of $55 million), as discussed below;
• an increase of $23 million in natural gas sales and other margin (excluding changes in unrealized losses of $3 million) primarily due to favorable results
from our optimization activities. Margin from natural gas sales and other includes purchased natural gas for transport and sale, derivatives used to hedge
transportation activities, gains and losses on derivatives used to hedge net retained fuel, and the margin from gas sales, processing and gathering fees on
our Houston pipeline system;
• a decrease of $8 million in operating expenses primarily due to a decrease in ad valorem taxes driven by the settlement of lower valuation with local
taxing authorities during the period; and
• an increase of $2 million in retention revenue as gains due to increased market prices, resulting in an $11 million increase in retention gas sales, were
offset by a reduction of $9 million due to lower volumes resulting from the cessation of certain long-term contracts. The average spot price at the
Houston Ship Channel location for the year ended December 31, 2014 increased by $0.62/MMBtu, or 17%, to $4.31/MMBtu compared to
$3.69/MMBtu in the prior year. Retained fuel volumes were down 9% from year to year; partially offset by
• a decrease of $25 million in transportation fees margin primarily due to the reduction of volumes under certain long-term transportation contracts; and
• an increase of $3 million in selling, general and administrative expenses primarily due to higher employee-related costs.
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