Energy Transfer 2010 Annual Report Download - page 136

• ETC Fayetteville Express Pipeline, LLC (“ETC FEP”), a Delaware limited liability company
formed to engage in interstate transportation of natural gas.
• ETC Tiger Pipeline, LLC (“ETC Tiger”), a Delaware limited liability company formed to
engage in interstate transportation of natural gas.
• ETC Compression, LLC (“ETC Compression”), a Delaware limited liability company engaged in
natural gas compression services and related equipment sales.
• Heritage Operating, L.P. (“HOLP”), a Delaware limited partnership primarily engaged in retail propane
operations. Our retail propane operations focus on sales of propane and propane-related products and
services. The retail propane customer base includes residential, commercial, industrial and agricultural
customers.
• Titan Energy Partners, L.P. (“Titan”), a Delaware limited partnership also engaged in retail propane
operations.
We have the following reportable business segments: intrastate transportation and storage; interstate
transportation; midstream; and retail propane and other retail propane related operations.
2. ESTIMATES, SIGNIFICANT ACCOUNTING POLICIES AND BALANCE SHEET DETAIL:
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and the accrual for and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period.
The natural gas industry conducts its business by processing actual transactions at the end of the month
following the month of delivery. Consequently, the most current month’s financial results for the midstream
and intrastate transportation and storage operations are estimated using volume estimates and market prices.
Any differences between estimated results and actual results are recognized in the following month’s
financial statements. Management believes that the estimated operating results represent the actual results in
all material respects.
Some of the other significant estimates made by management include, but are not limited to, the timing of
certain forecasted transactions that are hedged, the fair value of derivative instruments, useful lives for
depreciation and amortization, purchase accounting allocations and subsequent realizability of intangible
assets, fair value measurements used in the goodwill impairment test, market value of inventory, assets and
liabilities resulting from the regulated ratemaking process, contingency reserves and environmental
reserves. Actual results could differ from those estimates.
Revenue Recognition
Revenues for sales of natural gas, NGLs including propane, and propane appliances, parts and fittings are
recognized at the later of the time of delivery of the product to the customer or the time of sale or
installation. Revenues from service labor, transportation, treating, compression and gas processing are
recognized upon completion of the service. Transportation capacity payments are recognized when earned
in the period the capacity is made available. Tank rent is recognized ratably over the period it is earned.
Our intrastate transportation and storage and interstate transportation segments’ results are determined
primarily by the amount of capacity our customers reserve as well as the actual volume of natural gas that
flows through the transportation pipelines. Under transportation contracts, our customers are charged (i) a
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