Energy Transfer 2010 Annual Report Download - page 68

increases in environmental expenses of $1.6 million due to a pipeline rupture during 2010. Additionally, we
experienced a net increase of $1.1 million in various other operating expenses.
Depreciation and Amortization. Intrastate transportation and storage depreciation and amortization expense
increased primarily due to the completion of pipeline expansion projects during the periods.
Selling, General and Administrative Expenses. Intrastate transportation and storage selling, general and
administrative expenses increased between the periods primarily due to increased employee-related costs
(including allocated overhead expenses) of approximately $24.4 million which was primarily attributable to
accrued bonus expense, for which none was recorded in 2009. Offsetting the increase was a decrease in
professional fees of approximately $12.8 million between periods.
Interstate Transportation
Years Ended December 31,
2010 2009 Change
Natural gas MMBtu/d — transported 1,616,762 1,661,785 (45,023)
Natural gas MMBtu/d — sold 23,760 18,531 5,229
Revenues $ 292,419 $ 270,213 $ 22,206
Operating expenses 83,740 59,343 24,397
Depreciation and amortization 52,582 48,297 4,285
Selling, general and administrative 21,803 24,340 (2,537)
Segment operating income $ 134,294 $ 138,233 $ (3,939)
The interstate transportation segment data presented above includes the results of our Tiger pipeline subsequent
to being placed in service in December 2010. The interstate transportation segment data presented above does not
include our interstate pipeline joint ventures for which we reflect our proportionate share of income within
“Equity in earnings of affiliates” below operating income in our consolidated statements of operations. We
recorded equity in earnings related to MEP of $9.0 million and $14.0 million in 2010 and 2009, respectively. We
transferred substantially all of our interest in MEP to ETE on May 26, 2010, prior to which we held a 50% joint
venture interest in MEP.
Volumes. Average daily transportation volumes on Transwestern decreased during 2010 as compared to 2009
primarily due to less favorable market conditions for transporting natural gas to West delivery points. Tiger
pipeline was placed into service in December 2010, and incremental volumes for Tiger pipeline during December
2010 averaged 138,058 MMBtu/d.
Revenues. Revenues increased for 2010 compared to 2009 primarily due to increased gas prices for
Transwestern’s operational gas sales. In addition, transportation revenues increased approximately $1.9 million
for 2010 compared to 2009 due to incremental revenues of $10.2 million for the Tiger pipeline since being placed
into service in December 2010. The incremental revenue from Tiger pipeline was slightly offset by a decrease in
transportation revenues on Transwestern pipeline as a result of the decreased volumes discussed above.
Operating Expenses. The increase in operating expenses for 2010 compared to 2009 reflects a $9.6 million
increase in ad valorem and other taxes primarily related to increased property values for the Phoenix pipeline
expansion, a $5.2 million increase related to gas imbalance activities, a $2.1 million increase in right-of-way and
rent expenses, and a $2.0 million increase in maintenance project expenses.
Depreciation and Amortization. Depreciation and amortization expense was higher in 2010 compared to 2009
due to an increase of $2.3 million primarily related to Transwestern’s Phoenix pipeline expansion, as well as
incremental depreciation of $2.0 million related to the Tiger pipeline being placed in service in December 2010.
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