Energy Transfer 2010 Annual Report Download - page 74

Operating Expenses. Intrastate transportation and storage operating expenses decreased between the periods
primarily due to a $93.1 million decrease in the cost of natural gas consumed from $149.0 million in 2008 to
$55.9 million in 2009. This decrease was principally due to both a decrease in consumption volumes and a
decrease in natural gas prices as compared to the prior year. In addition, we experienced a decrease in electricity
costs of approximately $12.9 million between the periods. Offsetting these decreases were increases in ad
valorem taxes of $15.3 million, resulting from increased property values and additions, and increases in pipeline
maintenance expenses of approximately $3.4 million.
Depreciation and Amortization. Intrastate transportation and storage depreciation and amortization expense
increased primarily due to the completion of pipeline expansion projects as noted above.
Selling, General and Administrative Expenses. Intrastate transportation and storage selling, general and
administrative expenses decreased between the periods primarily due to decreased employee-related costs
(including allocated overhead expenses) of approximately $9.5 million and a decrease in professional fees of
approximately $2.8 million.
Interstate Transportation
Years Ended December 31,
2009 2008 Change
Natural gas MMBtu/d — transported 1,661,785 1,777,097 (115,312)
Natural gas MMBtu/d — sold 18,531 15,162 3,369
Revenues $ 270,213 $ 244,224 $ 25,989
Operating expenses 59,343 56,906 2,437
Depreciation and amortization 48,297 37,790 10,507
Selling, general and administrative 24,340 24,852 (512)
Segment operating income $ 138,233 $ 124,676 $ 13,557
The interstate transportation segment table does not include the natural gas volumes transported or sold, or the
operating income of our interstate pipeline joint ventures, which is reflected below operating income in our
consolidated statement of operations. During 2009, we recognized $14.0 million in equity in earnings related to
our 50% joint venture investment in MEP.
Volumes. Transported volumes decreased primarily as a result of less favorable pricing differentials between the
San Juan and Permian Basins during the period.
Revenues. Interstate transportation revenues increased between the periods by approximately $42.5 million
primarily as a result of the completion of the Phoenix project in February 2009. This increase was partially offset
by a $16.5 million decrease in operational gas sales primarily due to decreased natural gas prices between the
periods.
Operating Expenses. Interstate operating expenses increased between the periods due to an increase in ad
valorem taxes of approximately $4.2 million resulting from increased property values related to the Phoenix
pipeline expansion. The increase in ad valorem taxes was partially offset by a net decrease of $1.4 million in
operating expenses primarily due to lower electric demand costs, professional fees and gas imbalance activities.
Depreciation and Amortization. Interstate depreciation and amortization expense increased by $10.5 million
between the periods primarily due to incremental depreciation associated with the completion of the San Juan
lateral and Phoenix projects.
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