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SEC Filings
10-Q
SOUTHERN UNION CO filed this Form 10-Q on 08/08/2013
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9.
FAIR VALUE MEASUREMENT:

The following table sets forth the Company’s assets and liabilities that are measured at fair value on a recurring basis:
 
 
Fair Value
as of
 
Fair Value Measurements at
June 30, 2013
Using Fair Value Hierarchy
 
 
June 30, 2013
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
Commodity derivatives
 
$
1

 
$

 
$
1

 
$

Total
 
$
1

 
$

 
$
1

 
$

Liabilities:
 
 

 
 

 
 

 
 

Commodity derivatives
 
$
5

 
$

 
$
5

 
$

Interest rate swaps
 
49

 

 
49

 

Total
 
$
54

 
$

 
$
54

 
$


The Company’s Level 2 instruments primarily include natural gas price swaps and interest rate swap derivatives that are valued using pricing models based on an income approach that discounts future cash flows to a present value amount.  The significant pricing model inputs for natural gas price swaps include published NYMEX forward index prices for delivery of natural gas at Henry Hub, Permian Basin and Waha.  The significant pricing model inputs for interest rate swaps include published rates for U.S. Dollar LIBOR interest rate swaps.  The pricing models also adjust for nonperformance risk associated with the counterparty or Company, as applicable, through the use of credit risk adjusted discount rates based on published default rates.  The Company did not have any Level 3 fair value measurements at June 30, 2013. During the period ended June 30, 2013, no transfers were made between any levels within the fair value hierarchy.

10.
COMMITMENTS AND CONTINGENCIES:
PEPL Holdings Guarantee of Collection
In connection with the SUGS Contribution, Regency issued $600 million of 4.50% Senior Notes due 2023 (the “Regency Debt”), the proceeds of which were used by Regency to fund the cash portion of the consideration, as adjusted, and pay certain other expenses or disbursements directly related to the closing of the SUGS Contribution.  In connection with the closing of the SUGS Contribution on April 30, 2013, Regency entered into an agreement with PEPL Holdings, a subsidiary of the Company, pursuant to which PEPL Holdings provided a guarantee of collection (on a nonrecourse basis to the Company) to Regency and Regency Energy Finance Corp. with respect to the payment of the principal amount of the Regency Debt through maturity in 2023.
Environmental Matters
The Company’s operations are subject to federal, state and local laws, rules and regulations regarding water quality, hazardous and solid waste management, air quality control and other environmental matters.  These laws, rules and regulations require the Company to conduct its operations in a specified manner and to obtain and comply with a wide variety of environmental registrations, licenses, permits, inspections and other approvals.  Failure to comply with environmental laws, rules and regulations may expose the Company to significant fines, penalties and/or interruptions in operations.  The Company’s environmental policies and procedures are designed to achieve compliance with such applicable laws and regulations.  These evolving laws and regulations and claims for damages to property, employees, other persons and the environment resulting from current or past operations may result in significant expenditures and liabilities in the future.  The Company engages in a process of updating and revising its procedures for the ongoing evaluation of its operations to identify potential environmental exposures and enhance compliance with regulatory requirements.
Environmental Remediation
Transportation and Storage Segment
Panhandle is responsible for environmental remediation at certain sites on its natural gas transmission systems for contamination resulting from the past use of lubricants containing PCBs in compressed air systems; the past use of paints containing PCBs; and the prior use of wastewater collection facilities and other on-site disposal areas.  Panhandle has implemented a program to remediate such contamination.  The primary remaining remediation activity on the Panhandle systems is associated with past use of paints containing PCBs or PCB impacts to equipment surfaces and to a building at one location.  The PCB assessments are ongoing and the related estimated remediation costs are subject to further change.  Other

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