RESULTS OF OPERATIONS
Three Months Ended
Transportation and storage of natural gas
Total operating revenues
Cost of natural gas and other energy
Operating and maintenance
General and administrative
Depreciation and amortization
Total operating expenses
OTHER INCOME (EXPENSE):
Interest expense, net
Equity in earnings of unconsolidated affiliates
Interest income — affiliates
Total other income (expense), net
INCOME BEFORE INCOME TAX EXPENSE
Income tax expense
Panhandle natural gas volumes transported (TBtu):
Operating Revenues. Operating revenues decreased for the three months ended March 31, 2016 compared to the same period in the prior year primarily due to the transfer of one of the pipelines at Trunkline that was taken out of service in advance of being repurposed from natural gas service to crude oil service.
Equity in earnings of unconsolidated affiliates. Equity in earnings of unconsolidated affiliates decreased for the three months ended March 31, 2016 compared to the same period in the prior year due to the exchange of the Company’s investment in ETP for a note receivable from a subsidiary of ETP effective September 1, 2015. The earnings for the three months ended March 31, 2015 reflects the Company’s earnings related to its investment in ETP.
Interest Income - Affiliates. Interest income from affiliates increased for the three months ended March 31, 2016 compared to the same period in the prior year due to the note receivable with a subsidiary of ETP and a note receivable with ETP, effective September 2015 and February 2016, respectively.
Income Taxes. For the three months ended March 31, 2016, the statutory rate differed from the effective rate primarily due to $2 million of net state income tax adjustments. The effective tax rate exceeded the statutory rate for the three months ended March 31, 2015 primarily due to $4 million of net state income tax benefits related to prior period adjustments.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 3, Quantitative and Qualitative Disclosures About Market Risk, has been omitted from this report pursuant to the reduced disclosure format permitted by General Instruction H to Form 10-Q.