Energy Transfer 2010 Annual Report Download - page 67

• 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 $40.0 million for the year ended
December 31, 2010 compared to $60.7 million for the year ended December 31, 2009. The decrease of
$20.7 million between periods was primarily due to a reduction in the amount of capacity utilized by our
marketing affiliate.
• Margin from natural gas sales and other activity increased $18.1 million for the year ended
December 31, 2010 as compared to December 31, 2009 primarily due to more favorable margins on gas
sales and favorable impacts from system optimization activities. The margin from the 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. Natural gas sales and other
increased as a result of system optimization activities including gains and losses on derivatives used to
hedge our retention gas and unsold transportation capacity. Excluding derivatives related to storage, for
the year ended December 31, 2010, we had unrealized losses of $13.3 million compared to unrealized
gains of $20.9 million for the year ended December 31, 2009.
• 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. Although retention volumes were lower for the year
ended December 31, 2010 compared to 2009, retention revenue increased $5.8 million due to more
favorable pricing. Our average retention price for physical gas we retained during 2010 was
$4.20/MMBtu compared to $3.54/MMBtu for 2009.
Storage margin was comprised of the following:
Years Ended December 31,
2010 2009 Change
Withdrawals from storage natural gas
inventory (MMBtu) 39,784,446 23,305,452 16,478,994
Margin on physical sales $ 68,661 $ 12,113 $ 56,548
Fair value adjustments (57,157) 14,630 (71,787)
Settlements of financial derivatives 1,517 177,949 (176,432)
Unrealized gains (losses) on
derivatives 8,842 (111,171) 120,013
Net impact of natural gas inventory
transactions 21,863 93,521 (71,658)
Revenues from fee-based storage 40,674 39,779 895
Other costs (1,042) (3,804) 2,762
Total storage margin $ 61,495 $ 129,496 $ (68,001)
The decrease in our storage margin for the year ended December 31, 2010 compared to 2009 was principally
driven by reductions in mark-to-market adjustments associated with the decline in spreads between the spot and
forward prices prior to withdrawing natural gas from our Bammel storage facility. We also experienced lower
realized margins from our withdrawals due to weaker market conditions in 2010 than in 2009.
Operating Expenses. Intrastate transportation and storage operating expenses decreased between the periods
primarily due to a $14.3 million decrease in the cost of natural gas consumed from $55.9 million in 2009 to $41.6
million in 2010. This decrease was principally due to a decrease in consumption volumes as compared to the
prior year. In addition, we experienced a decrease in electricity costs of approximately $4.6 million between the
periods. Offsetting these decreases were increases in pipeline maintenance expenses of approximately $8.6
million, increases in ad valorem taxes of $2.8 million resulting from increased property values and additions, and
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