ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Tabular dollar amounts are in millions)
The information in Item 2 has been prepared pursuant to the reduced disclosure format permitted by General Instruction H to Form 10-Q. Accordingly, this Item 2 includes only management’s narrative analysis of the results of operations and should be read in conjunction with (i) our historical consolidated financial statements and accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q and (ii) our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 23, 2018.
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
Interest income — affiliates
INCOME BEFORE INCOME TAX EXPENSE
Income tax expense
Panhandle natural gas volumes transported (TBtu):
Operating Revenues. Operating revenues increased for the three months ended March 31, 2018 compared to the same period in the prior year on the Panhandle and Trunkline pipelines due to higher customer demand driven by colder weather.
Operating Expenses. Operating expenses decreased for the three months ended March 31, 2018 compared to the same period in the prior year due to lower allocated costs and system gas activity.
Interest income - affiliates. Interest income - affiliates decreased for the three months ended March 31, 2018 compared to the same period in the prior year primarily due to the settlement of a note receivable from a subsidiary of ETP in November 2017.
Income Taxes. The change in income tax expense for the three months ended March 31, 2018 compared to the same period in the prior year was primarily due to an increase in income before income tax expense offset by a reduction in the federal corporate income rate per the “Tax Cuts and Jobs Act.”