View Filing Data

Document And Entity Information	3 Months Ended
Document And Entity Information	Jun. 30, 2011 USD ($) shares
Document Information Line Items
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Entity Information Line Items
Entity Registrant Name	Panhandle Eastern Pipe Line Co LP
Entity Central Index Key	0000076063
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Public Float \| $	$ 0
Entity Common Stock, Shares Outstanding \| shares	0

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Operating revenues:
Transportation and storage of natural gas	$ 132,240	$ 130,601	$ 277,756	$ 277,329
LNG terminalling revenue	55,110	54,192	109,282	91,778
Other	2,410	2,297	5,016	4,658
Total operating revenues	189,760	187,090	392,054	373,765
Operating expenses:
Operation, maintenance and general	48,289	54,762	104,590	108,646
Operation, maintenance and general - affiliates	13,369	11,727	26,767	25,604
Depreciation and amortization	31,963	30,896	64,237	60,073
Taxes, other than on income	8,434	8,894	17,739	18,122
Total operating expenses	102,055	106,279	213,333	212,445
Operating income	87,705	80,811	178,721	161,320
Other income (expenses):
Interest expense	(26,980)	(27,151)	(53,914)	(49,540)
Interest income - affiliates	2,144	2,142	4,313	4,155
Other, net	86	99	148	143
Total other income (expense)	(24,750)	(24,910)	(49,453)	(45,242)
Earnings before income taxes	62,955	55,901	129,268	116,078
Federal and state income tax expense	22,736	22,148	43,437	48,733
Net earnings	$ 40,219	$ 33,753	$ 85,831	$ 67,345

CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) - USD ($) $ in Thousands	Jun. 30, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 48	$ 56
Accounts receivable, billed and unbilled, less allowances of $896 and $897, respectively	69,021	77,888
Accounts receivable - related parties	4,233	5,922
Natural gas imbalances - receivable	69,435	51,607
System natural gas and operating supplies	103,204	147,254
Note receivable - related party	368,126	0
Other	25,732	22,261
Total current assets	639,799	304,988
Property, plant and equipment:
Plant in service	3,963,037	3,952,425
Construction work in progress	70,457	47,085
Property, Plant and Equipment, Gross	4,033,494	3,999,510
Less accumulated depreciation and amortization	677,986	613,336
Net property, plant and equipment	3,355,508	3,386,174
Note receivable - related parties	610,530	823,406
Other	21,756	24,361
Total assets	4,627,593	4,538,929
Partners Capital Abstract
Partners' capital	1,726,522	1,640,691
Accumulated other comprehensive loss	(11,991)	(16,928)
Tax sharing note receivable	(2,173)	(3,188)
Total partners' capital	1,712,358	1,620,575
Long-term debt	1,169,131	1,984,427
Total capitalization	2,881,489	3,605,002
Current liabilities:
Current portion of long-term debt	815,391	0
Accounts payable	13,488	9,811
Accounts payable - related parties	57,368	56,393
Natural gas imbalances - payable	150,913	177,192
Accrued taxes	17,406	15,423
Accrued interest	14,211	14,298
Capital Accruals	12,845	33,038
Other	91,611	95,191
Total current liabilities	1,173,233	401,346
Deferred income taxes, net	520,031	466,309
Other	52,840	66,272
Commitments and contingencies	0	0
Total stockholders' equity and liabilities	$ 4,627,593	$ 4,538,929

PARENTHETICAL DISCLOSURE OF CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) - USD ($) $ in Thousands	Jun. 30, 2011	Dec. 31, 2010
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ (896)	$ (897)

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Cash flows provided by (used in) operating activities:
Net earnings	$ 85,831	$ 67,345
Adjustments to reconcile net earnings to net cash flows provided by operating activities:
Depreciation and amortization	64,237	60,073
Deferred income taxes	47,689	35,001
Changes in operating assets and liabilities	9,832	(9,331)
Net cash flows provided by operating activities	207,589	153,088
Cash flows (used in) provided by investing activities:
Net decrease (increase) in note receivable - related parties	(155,250)	(69,850)
Net increase (decrease) in income taxes payable - related parties	(3,678)	12,717
Additions to property, plant and equipment	(50,317)	(61,670)
Plant retirements and other	687	5,376
Net cash flows used in investing activities	(208,558)	(113,427)
Cash flows provided by (used in) financing activities:
Increase in book overdraft	961	850
Repayment of debt	0	(40,500)
Net cash flows provided by (used in) financing activities	961	(39,650)
Change in cash and cash equivalents	(8)	11
Cash and cash equivalents at beginning of period	56	55
Cash and cash equivalents at end of period	$ 48	$ 66

CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL AND COMPREHENSIVE INCOME (UNAUDITED) - 6 months ended Jun. 30, 2011 - USD ($) $ in Thousands	Total	Partners Capital [Member]	Accumulated Other Comprehensive Income [Member]	Tax Sharing Note Receivable [Member]
Beginning balance at Dec. 31, 2010	$ 1,620,575	$ 1,640,691	$ (16,928)	$ (3,188)
Tax sharing note receivable	1,015	0	0	1,015
Comprehensive income:
Net earnings	85,831	85,831	0	0
Net change in other comprehensive loss	4,937	0	4,937	0
Comprehensive income	90,768	85,831	4,937	0
Ending balance at Jun. 30, 2011	$ 1,712,358	$ 1,726,522	$ (11,991)	$ (2,173)

- Definition

The change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to the reporting entity. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, but excludes any and all transactions which are directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent.

+ References

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- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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- Definition

This element represents Other Comprehensive Income or Loss, Net of Tax, for the period. Includes deferred gains or losses on qualifying hedges, unrealized holding gains or losses on available-for-sale securities, minimum pension liability, and cumulative translation adjustment. While for technical reasons this element has no balance attribute, the default assumption is a credit balance consistent with its label.

+ References

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+ Details

- Definition

The amount of ownership interest of different classes of partners in limited partnership.

+ References + Details

Description of Business

3 Months Ended

Jun. 30, 2011

Notes to Financial Statements [Abstract]

Description of Business

The accompanying unaudited interim condensed consolidated financial statements of PEPL, a Delaware limited partnership, and its subsidiaries have been prepared pursuant to the rules and regulations of the SEC for quarterly reports on Form 10-Q. These statements do not include all of the information and annual note disclosures required by GAAP, and should be read in conjunction with the Company's financial statements and notes thereto for the year ended December 31, 2010, which are included in the Company's Form 10-K filed with the SEC. The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP and reflect adjustments that are, in the opinion of management, necessary for a fair statement of results for the interim period. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. Due to the seasonal nature of the Company's operations, the results of operations and cash flows for any interim period are not necessarily indicative of the results that may be expected for the full year.

In 1999, the Company discontinued application of regulatory-based accounting policies for its units which had been applying such accounting policies, primarily due to the level of market competition resulting in increased discounting from tariff rates and impacting the Company's prospects for recovering changes in costs levels through future rate cases. The accounting required by the regulatory-based authoritative guidance differs from the accounting required for businesses that do not apply its provisions. Transactions that are generally recorded differently as a result of applying regulatory accounting requirements include, among others, recognition of regulatory assets, the capitalization of an equity component of invested funds on regulated capital projects and depreciation differences.

1. Description of Business

Panhandle is primarily engaged in the interstate transportation and storage of natural gas and also provides LNG terminalling and regasification services. The Company is subject to the rules and regulations of the FERC. The Company's entities include the following:

PEPL, an indirect wholly-owned subsidiary of Southern Union Company;
Trunkline, a direct wholly-owned subsidiary of PEPL;
Sea Robin, an indirect wholly-owned subsidiary of PEPL;
LNG Holdings, an indirect wholly-owned subsidiary of PEPL;
Trunkline LNG, a direct wholly-owned subsidiary of LNG Holdings; and
Southwest Gas Storage, a direct wholly-owned subsidiary of PEPL.

The Company's pipeline assets include approximately 10,000 miles of interstate pipelines that transport natural gas from the Gulf of Mexico, South Texas and the panhandle regions of Texas and Oklahoma to major U.S. markets in the Midwest and Great Lakes region. The pipelines have a combined peak day delivery capacity of 5.5 Bcf/d and approximately 68.1 Bcf of owned underground storage capacity. The Company also owns and operates an LNG import terminal located on Louisiana's Gulf Coast, and has 9.0 Bcf of above ground LNG storage capacity.

Southern Union Panhandle, LLC, a direct wholly-owned subsidiary of Southern Union Company, serves as the general partner of PEPL and owns a one percent general partnership interest in PEPL. Southern Union Company owns a ninety-nine percent limited partnership interest in PEPL.

See Note 3 – ETE Merger for information related to the potential merger of Southern Union, including PEPL and its subsidiaries, with ETE.

New Accounting Principles and Other Matters

3 Months Ended

Jun. 30, 2011

Notes to Financial Statements [Abstract]

New Accounting Principles and Other Matters

2. New Accounting Principles

Accounting Principles Not Yet Adopted. In June 2011, the FASB issued authoritative guidance that changes how a company may present comprehensive income. The guidance allows entities to elect to present items of net income and other comprehensive income in one continuous statement or in two separate, but consecutive statements and eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. The guidance is effective as of the beginning of a fiscal year that begins after December 15, 2011 and interim and annual periods thereafter, with early adoption permitted. The Company does not expect the guidance to materially impact its consolidated financial statements as the guidance only requires a change in the placement of previously disclosed information.

In May 2011, the FASB issued authoritative guidance on fair value measurements that clarifies some existing concepts, eliminates wording differences between GAAP and International Financial Reporting Standards (IFRS), and in some limited cases, changes some principles to achieve convergence between GAAP and IFRS. The guidance provides a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between GAAP and IFRS and also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. The guidance is effective for periods beginning after December 15, 2011. The Company is currently evaluating the impact of this guidance, but does not expect it will materially impact its consolidated financial statements.

- Definition

Tabular disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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+ Details

ETE Merger	6 Months Ended
ETE Merger	Jun. 30, 2010
Notes to Financial Statements [Abstract]
ETE Merger	3. ETE Merger On July 19, 2011, Southern Union entered into a Second Amended and Restated Agreement and Plan of Merger (Second Amended Merger Agreement) with ETE and Sigma Acquisition Corporation, a wholly-owned subsidiary of ETE (Merger Sub). The Second Amended Merger Agreement modifies certain terms of the Agreement and Plan of Merger entered into by Southern Union, ETE and Merger Sub on June 15, 2011 as amended on July 4, 2011. The Second Amended Merger Agreement provides for the merger of Merger Sub with and into Southern Union (Merger), with Southern Union continuing as the surviving corporation in the Merger. As a result of the Merger, Southern Union will become a wholly-owned subsidiary of ETE. The Merger is expected to close in the first quarter of 2012, subject to stockholder approval and certain other regulatory approvals.

Related Party Transactions

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements [Abstract]

Related Party Transactions

4. Related Party Transactions

The following table provides a summary of related party transactions for the periods presented.

		Three Months Ended June 30,				Six Months Ended June 30,
		2011		2010		2011		2010

		(In thousands)

Transportation and storage
	of natural gas (1)	$	663	$	648	$	1,671	$	1,925
Operation and maintenance:
	Management and royalty fees		4,743		4,661		9,798		9,344
	Other expenses (2)		8,626		7,066		16,969		16,260
Other income, net:
	Interest income - Southern Union		384		310		771		568
	Interest income - CrossCountry Citrus		1,760		1,832		3,542		3,587
	Other		64		69		130		128

___________________________

Represents transportation and storage revenues with Missouri Gas Energy, a Southern Union division.
Primarily includes allocations of corporate charges from Southern Union, partially offset for expenses attributable to services provided by Panhandle on behalf of other affiliate companies.

Pursuant to a demand note with Southern Union Company under a cash management program, the Company loans excess cash, net of repayments, to Southern Union. The Company is credited with interest on the note at a one month LIBOR rate. Given the uncertainties regarding the timing of the Company's cash flows, including financings, capital expenditures and operating cash flows, the Company has reported the note receivable as a non-current asset. The Company has access to the funds via the demand note and expects repayment to ultimately occur to primarily fund capital expenditures or debt retirements.

The interest rate under the note receivable with CrossCountry Citrus is based on the variable interest rate under the term loan facility due in 2012 plus a credit spread over LIBOR of 112.5 basis points.

The counterparty to the notes receivable is the parent of the Company, Southern Union, whose debt is rated BBB- by Fitch Ratings, Baa3 by Moody's Investor Services, Inc. and BBB- by Standard & Poor's.

The following table provides a summary of the related party balances included in the Condensed Consolidated Balance Sheet at the dates indicated.

		June 30,		December 31,
		2011		2010

			(In thousands)
Notes receivable - related parties:
	Current:
	CrossCountry Citrus	$	368,126	$	-

	Noncurrent:
	Southern Union	$	610,530	$	455,280
	CrossCountry Citrus		-		368,126
		$	610,530	$	823,406

Accounts receivable - related parties (1)		$	4,233	$	5,922

Accounts payable - related parties:
	Southern Union - income taxes (2)	$	39,595	$	43,273
	Southern Union - other (3)		17,004		12,940
	Other (4)		769		180
		$	57,368	$	56,393

______________________________

Primarily related to interest income associated with the Note receivable – CrossCountry Citrus and services provided for Citrus.
Related to income taxes payable to Southern Union per the tax sharing agreement to provide for taxes to be remitted upon the filing of the tax return.
Primarily related to payroll funding provided by Southern Union. The June 30, 2011 and December 31, 2010 amounts are net of insurance proceeds of nil and $13.9 million, respectively, owed by Southern Union to the Company.
Primarily related to various administrative and operating costs paid by other affiliate companies on behalf of the Company.

- Definition

The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Article 4
-Section 08
-Paragraph k

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Article 3A
-Section 04
-Paragraph b

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 57
-Paragraph 1-4
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
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-Paragraph 4
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(k))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39678-107864

+ Details

Regulatory Matters

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements [Abstract]

Regulation and Rates

5. Regulation and Rates

On August 31, 2009, Sea Robin filed with FERC to implement a rate surcharge to recover Hurricane Ike-related costs not otherwise recovered from insurance proceeds or from other third parties, with initial accumulated net costs of approximately $38 million included in the filing. On September 30, 2009, FERC approved the surcharge to be effective March 1, 2010, subject to refund and the outcome of hearings with FERC to explore issues set forth in certain customer protests, including the costs to be included and the applicability of the surcharge to discounted contracts. The Administrative Law Judge issued an initial decision on December 13, 2010, approving the surcharge for recovery from all shippers, including discounted and non-discounted shippers, over a recovery period of 21.4 years and including applicable carrying charges. The Company, as well as other parties, have filed briefs for exception on certain aspects of the decision. On March 1, 2011, Sea Robin submitted its latest semiannual filing related to the surcharge which reflected updated costs incurred through December 31, 2010 of approximately $54 million, net of insurance and surcharge recoveries, which were reflected in the updated surcharge rate effective April 1, 2011, subject to refund. The ultimate outcome of this matter is still pending a final FERC decision.

Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements [Abstract]

Accumulated Other Comprehensive Loss

6. Comprehensive Income

The table below provides an overview of Comprehensive income for the periods presented.

		Three Months Ended June 30,				Six Months Ended June 30,
		2011		2010		2011		2010

		(In thousands)

Net earnings		$	40,219	$	33,753	$	85,831	$	67,345

Reclassification of unrealized loss on interest rate
	hedges into earnings, net of tax of $2,190, $2,187,
	$4,354 and $4,373, respectively		3,260		3,255		6,482		6,510
Change in fair value of interest rate hedges, net of tax
	of $(244), $(1,308), $(531) and $(3,614), respectively		(361)		(1,945)		(789)		(5,375)
Reclassification of prior service credit relating to other
	postretirement benefits into earnings, net of tax of
	$(143), $(203), $(287) and $(405), respectively		(378)		(319)		(756)		(640)
Total other comprehensive income			2,521		991		4,937		495

Total comprehensive income		$	42,740	$	34,744	$	90,768	$	67,840

The table below provides an overview of the components in Accumulated other comprehensive loss as of the dates indicated.

	June 30,		December 31,
	2011		2010

	(In thousands)

Other postretirement plan - net actuarial loss and prior service costs, net	$	(2,038)	$	(1,282)
Interest rate hedges, net		(9,953)		(15,646)
Total Accumulated other comprehensive income, net of tax	$	(11,991)	$	(16,928)

- Definition

The entire disclosure for comprehensive income. Includes, but is not limited to, the following: 1) the amount of income tax expense or benefit allocated to each component of other comprehensive income, including reclassification adjustments, 2) the reclassification adjustments for each classification of other comprehensive income and 3) the ending accumulated balances for each component of comprehensive income. Components of comprehensive income include: (1) foreign currency translation adjustments; (2) gains (losses) on foreign currency transactions that are designated as, and are effective as, economic hedges of a net investment in a foreign entity; (3) gains (losses) on intercompany foreign currency transactions that are of a long-term-investment nature, when the entities to the transaction are consolidated, combined, or accounted for by the equity method in the reporting enterprise's financial statements; (4) change in the market value of a futures contract that qualifies as a hedge of an asset reported at fair value; (5) unrealized holding gains (losses) on available-for-sale securities and that resulting from transfers of debt securities from the held-to-maturity category to the available-for-sale category; (6) a net loss recognized as an additional pension liability not yet recognized as net periodic pension cost; and (7) the net gain (loss) and net prior service cost or credit for pension plans and other postretirement benefit plans.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 14-26
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187085-122770

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Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Reclassification Adjustments
-URI http://asc.fasb.org/extlink&oid=6522872

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
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Reference 11: http://www.xbrl.org/2003/role/presentationRef
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-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=6920043&loc=d3e689-108580

+ Details

Debt Obligations

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements [Abstract]

Debt Obligations

7. Debt Obligations

The following table sets forth the debt obligations at the dates indicated.

		June 30, 2011				December 31, 2010
		Carrying Amount		Fair Value		Carrying Amount		Fair Value

			(In thousands)

6.05% Senior Notes due 2013		$	250,000	$	273,260	$	250,000	$	268,988
6.20% Senior Notes due 2017			300,000		346,413		300,000		322,893
8.125% Senior Notes due 2019			150,000		183,813		150,000		169,671
7.00% Senior Notes due 2029			66,305		70,068		66,305		69,911
7.00% Senior Notes due 2018			400,000		472,416		400,000		442,120
Term Loans due 2012			815,391		808,481		815,391		799,084
Net premiums on long-term debt			2,826		2,826		2,731		2,731
Total debt outstanding			1,984,522	$	2,157,277		1,984,427	$	2,075,398
	Less current portion of long-term debt		815,391				-
Total long-term debt		$	1,169,131			$	1,984,427

The fair value of the Company's term loans as of June 30, 2011 and December 31, 2010 was determined using the market approach, which utilized reported recent loan transactions for parties of similar credit quality and remaining life, as there is no active secondary market for loans of these types and sizes.

The fair value of the Company's other long-term debt as of June 30, 2011 and December 31, 2010 was also determined using the market approach, which utilized observable market data to corroborate the estimated credit spreads and prices for the Company's non-bank long-term debt securities in the secondary market. Those valuations were based in part upon the reported trades of the Company's non-bank long-term debt securities where available and the actual trades of debt securities of similar credit quality and remaining life where no secondary market trades were reported for the Company's non-bank long-term debt securities.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References + Details

Postretirement Benefits

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements [Abstract]

Benefits

8. Benefits

The following table sets forth the components of net periodic benefit cost of the Company's postretirement benefit plan for the periods presented.

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010

	(In thousands)

Service cost	$	638	$	575	$	1,275	$	1,150
Interest cost		950		872		1,900		1,744
Expected return on plan assets		(950)		(838)		(1,900)		(1,675)
Prior service credit amortization		(522)		(522)		(1,044)		(1,044)
Net periodic benefit cost	$	116	$	87	$	231	$	175

- Definition

The entire disclosure for pension and other postretirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph a
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph h
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph q
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 8
-Subparagraph m
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 106
-Paragraph 518
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 87
-Paragraph 264
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
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-Name Emerging Issues Task Force (EITF)
-Number 03-2
-Paragraph 8
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 30
-Paragraph 26
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef
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Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 158
-Paragraph 7, 21, 22
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5, 6, 7, 8
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Implementation Guide (Q and A)
-Number FAS88
-Paragraph 63
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 14: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 715
-URI http://asc.fasb.org/topic&trid=2235017

+ Details

Taxes on Income

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements [Abstract]

Taxes on Income

9. Income Taxes

The following table summarizes the Company's income taxes for the periods presented.

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010

	(In thousands)

Income tax expense	$	22,736	$	22,148	$	43,437	$	48,733
Effective tax rate		36%		40%		34%		42%

The EITR for the six-month period ended June 30, 2011 is lower than the combined federal and state income tax statutory rates primarily due to state investment tax credits, whereas in 2010 the EITR was higher than the combined federal and state income tax statutory rates primarily due to the elimination of the Medicare Part D tax subsidy in the Patient Protection and Affordable Care Act legislation signed into law in March 2010.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 109
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Derivatives and Hedging Activities

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements [Abstract]

Derivative Instruments and Hedging Activities

10. Derivative Instruments and Hedging Activities

The Company is exposed to certain risks in its ongoing business operations. The primary risk managed by using derivative instruments is interest rate risk. Interest rate swaps and treasury rate locks are the principal derivative instruments used by the Company to manage interest rate risk associated with its long-term borrowings, although other interest rate derivative contracts may also be used from time to time. The Company recognizes all derivative instruments as assets or liabilities at fair value in the unaudited interim Condensed Consolidated Balance Sheet.

Interest Rate Contracts

The Company may enter into interest rate swaps to manage its exposure to changes in interest payments on long-term debt attributable to movements in market interest rates, and may enter into treasury rate locks to manage its exposure to changes in future interest payments attributable to changes in treasury rates prior to the issuance of new long-term debt instruments.

Interest Rate Swaps. The Company has outstanding pay-fixed interest rate swaps with a total notional amount of $455 million applicable to the LNG Holdings $455 million term loan. These interest rate swaps are accounted for as cash flow hedges, with the effective portion of changes in their fair value recorded in Accumulated other comprehensive loss and reclassified into Interest expense in the same periods during which the related interest payments on long-term debt impact earnings. As of June 30, 2011, approximately $8.9 million of net after-tax losses in Accumulated other comprehensive loss related to these interest rate swaps is expected to be amortized into Interest expense during the next twelve months. Any ineffective portion of the cash flow hedge is reported in current-period earnings.

Treasury Rate Locks. As of June 30, 2011, the Company had no outstanding treasury rate locks. However, certain of its treasury rate locks that settled in prior periods are associated with interest payments on outstanding long-term debt. These treasury rate locks are accounted for as cash flow hedges, with the effective portion of their settled value recorded in Accumulated other comprehensive loss and reclassified into Interest expense in the same periods during which the related interest payments on long-term debt impact earnings. As of June 30, 2011, approximately $166,000 of net after-tax losses in Accumulated other comprehensive loss related to these treasury rate locks will be amortized into Interest expense during the next twelve months.

The Company had no asset derivative instruments at June 30, 2011 and December 31, 2010. The following table summarizes the fair value amounts of the Company's liability derivative instruments and their location in the unaudited interim Condensed Consolidated Balance Sheet at the dates indicated.

	Balance Sheet	June 30,		December 31,
	Location	2011		2010

			(In thousands)
Cash Flow Hedges:
Interest rate contracts	Other current liabilities	$	14,965	$	19,694
	Other noncurrent liabilities		-		4,652
		$	14,965	$	24,346

The following table summarizes the location and amount of derivative instrument gains and losses reported in the Company's unaudited interim condensed consolidated financial statements for the periods presented.

			Three Months Ended June 30,				Six Months Ended June 30,
			2011		2010		2011		2010

			(In thousands)
Cash Flow Hedges: (1)
	Change in fair value - increase in Accumulated other
		comprehensive loss, excluding tax expense effect of $244,
		$1,308, $531 and $3,614, respectively	$	605	$	3,253	$	1,320	$	8,989
	Reclassification of unrealized loss from Accumulated
		other comprehensive loss - increase of Interest
		expense, excluding tax expense effect of $2,190, $2,187,
		$4,354 and $4,373, respectively		5,450		5,442		10,836		10,883

____________

See Note 6 – Comprehensive Income for additional related information.

- Definition

The entire disclosure for the entity's entire derivative instruments and hedging activities. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items.

+ References

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+ Details

Fair Value Measurement

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements [Abstract]

Fair Value Measurement

11. Fair Value Measurement

The following table sets forth the Company's liabilities that are measured at fair value on a recurring basis at the date indicated.

		Fair Value as of		Fair Value Measurements at June 30, 2011 Using Fair Value Hierarchy
		June 30, 2011		Level 1		Level 2		Level 3

		(In thousands)

Liabilities:
	Interest-rate swap derivatives	$	14,965	$	-	$	14,965	$	-
	Total	$	14,965	$	-	$	14,965	$	-

The Company's Level 2 interest-rate swap derivative instruments 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 the interest-rate swaps include published rates for U.S. Dollar LIBOR interest rate swaps. The pricing model also adjusts 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 instruments measured at fair value at June 30, 2011 or December 31, 2010.

The approximate fair value of the Company's cash and cash equivalents, accounts receivable and accounts payable is equal to book value, due to their short-term nature.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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+ Details

Commitments and Contingencies

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements [Abstract]

Commitments and Contingencies

12. Commitments and Contingencies

Litigation and Other Claims

The Company is involved in legal, tax and regulatory proceedings before various courts, regulatory commissions and governmental agencies regarding matters arising in the ordinary course of business.

Will Price. Will Price, an individual, filed actions in the U.S. District Court for the District of Kansas for damages against a number of companies, including the Company, alleging mis-measurement of natural gas volumes and Btu content, resulting in lower royalties to mineral interest owners. On September 19, 2009, the Court denied plaintiffs' request for class certification. Plaintiffs have filed a motion for reconsideration, which the Court denied on March 31, 2010. The Company believes that its measurement practices conformed to the terms of its FERC natural gas tariffs, which were filed with and approved by FERC. As a result, the Company believes that it has meritorious defenses to the Will Price lawsuit (including FERC-related affirmative defenses, such as the filed rate/tariff doctrine, the primary/exclusive jurisdiction of FERC, and the defense that the Company complied with the terms of its tariffs). In the event that Plaintiffs refuse Panhandle's pending request for voluntary dismissal, Panhandle will continue to vigorously defend the case. The Company believes it has no liability associated with this proceeding.

East End Project. The East End project involved the installation of a total of approximately 31 miles of pipeline in and around Tuscola, Illinois, Montezuma, Indiana and Zionsville, Indiana. Construction began in 2007 and was completed in the second quarter of 2008. The Company sought recovery of each contractor's share of approximately $50 million of cost overruns from the construction contractor, an inspection contractor and the construction management contractor for improper welding, inspection and construction management of the East End Project. Certain of the contractors filed counterclaims against the Company for alleged underpayments of approximately $18 million. The Company settled with three defendants prior to trial in Harris County, Texas. Trial began on May 16, 2011 and after the fourth week of trial a settlement was reached with the last defendant, Acuren. The various settlements resulted in the Company receiving a total of approximately $16 million and $9 million for reimbursement of previously incurred legal expenses associated with the proceeding and project cost overruns, respectively.

Liabilities for Litigation and Other Claims

The Company establishes reserves for litigation and other claim costs when management believes a loss is probable and reasonably estimable. As of June 30, 2011 and December 31, 2010, the Company recorded litigation and other claim-related accrued liabilities of $1.9 million and $1.8 million, respectively. The Company does not have any material litigation or other claim contingency matters assessed as reasonably possible.

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 applicable 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

The Company 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. The Company 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 remediation typically involves the management of contaminated soils and may involve remediation of groundwater. Activities vary with site conditions and locations, the extent and nature of the contamination, remedial requirements, complexity and sharing of responsibility. The ultimate liability and total costs associated with these sites will depend upon many factors. If remediation activities involve statutory joint and several liability provisions, strict liability, or cost recovery or contribution actions, the Company could potentially be held responsible for contamination caused by other parties. In some instances, the Company may share liability associated with contamination with other PRPs. The Company may also benefit from contractual indemnities that cover some or all of the cleanup costs. These sites are generally managed in the normal course of business or operations.

The Company's environmental remediation activities are undertaken in cooperation with and under the oversight of appropriate regulatory agencies, enabling the Company under certain circumstances to take advantage of various voluntary cleanup programs in order to perform the remediation in the most effective and efficient manner.

Environmental Remediation Liabilities

The table below reflects the amount of accrued liabilities recorded in the Condensed Consolidated Balance Sheet at the dates indicated to cover environmental remediation actions where management believes a loss is probable and reasonably estimable. The Company does not have any material environmental remediation matters assessed as reasonably possible.

	June 30,		December 31,
	2011		2010

		(In thousands)

Current	$	2,340	$	4,273
Noncurrent		5,228		4,498
Total environmental liabilities	$	7,568	$	8,771

Other Commitments and Contingencies

Controlled Group Pension Liabilities. Southern Union Company (including certain of its divisions) sponsors a number of defined benefit pension plans for employees. Under applicable pension and tax laws, upon being acquired by Southern Union, the Company became a member of Southern Union Company's “controlled group” with respect to those plans and, along with Southern Union Company and any other members of that group, is jointly and severally liable for any failure by Southern Union (along with any other persons that may be or become a sponsor of any such plan) to fund any of these pension plans or to pay any unfunded liabilities that these plans may have if they are ever terminated. In addition, if any of the obligations of any of these pension plans is not paid when due, a lien in favor of that plan or the Pension Benefit Guaranty Corporation may be created against the assets of each member of Southern Union Company's controlled group, including the Company and each of its subsidiaries. Based on the latest actuarial information available as of December 31, 2010, the aggregate amount of the projected benefit obligations of these pension plans was approximately $193.7 million and the estimated fair value of all of the assets of these plans was approximately $127 million.

See Note 5 – Regulation and Rates for other potential contingent matters applicable to the Company.

Future Regulatory Compliance Commitments

Air Quality Control. In August 2010, EPA finalized a rule that requires reductions in a number of pollutants, including formaldehyde and carbon monoxide, for certain engines regardless of size at Area Sources (sources that emit less than ten tons per year of any one Hazardous Air Pollutant (HAP) or twenty-five tons per year of all HAPs) and engines less than 500 horsepower at Major Sources (sources that emit ten tons per year or more of any one HAP or twenty-five tons per year of all HAPs). Compliance is required by October 2013. It is anticipated that the limits adopted in this rule will be used in a future EPA rule that is scheduled to be finalized in 2013, with compliance required in 2016. This future rule is expected to require reductions in formaldehyde and carbon monoxide emissions from engines greater than 500 horsepower at Major Sources.

Nitrogen oxides are the primary air pollutant from natural gas-fired engines. Nitrogen oxide emissions may form ozone in the atmosphere. EPA lowered the ozone standard to seventy-five parts per billion (ppb) in 2008 with compliance anticipated in 2013 to 2015. In January 2010, EPA proposed lowering the standard to sixty to seventy ppb in lieu of the seventy-five ppb standard, with compliance required in 2014 or later.

In January 2010, EPA finalized a 100 ppb one-hour nitrogen dioxide standard. The rule requires the installation of new nitrogen dioxide monitors in urban communities and roadways by 2013. This new monitoring may result in additional nitrogen dioxide non-attainment areas. In addition, ambient air quality modeling may be required to demonstrate compliance with the new standard.

The Company is currently reviewing the potential impact of the August 2010 Area Source National Emissions Standards for Hazardous Air Pollutants rule and proposed rules regarding HAPs and ozone and the new nitrogen dioxide standard on its operations and the potential costs associated with the installation of emission control systems on its existing engines. The ultimate costs associated with these activities cannot be estimated with any certainty at this time, but the Company believes, based on the current understanding of the current and proposed rules, such costs will not have a material adverse effect on its consolidated financial position, results of operations or cash flows.

The Kansas Department of Health and Environment set certain contingency measures as part of the agency's ozone maintenance plan for the Kansas City area. These measures must be revised to conform to the requirements of the EPA ozone standard discussed above. As such, the costs associated with these activities cannot be estimated with any certainty at this time, but the Company believes, based on the current understanding of the proposed plan, such costs will not have a material adverse effect on its consolidated financial position, results of operations or cash flows.

SPCC Rules. In 2008 and 2009, the EPA adopted amendments to the SPCC rules with the stated intention of providing greater clarity, tailoring requirements and streamlining requirements. On October 7, 2010, EPA amended the compliance date for certain facilities from November 10, 2010 to November 10, 2011. The Company is currently reviewing the impact of the modified regulations on its operations and may incur costs for tank integrity testing, alarms and other associated corrective actions as well as potential upgrades to containment structures. Costs associated with such activities cannot be estimated with certainty at this time, but the Company believes, based on the current understanding of the current and proposed rules, such costs will not have a material adverse effect on its consolidated financial position, results of operations or cash flows.

- Definition

The entire disclosure for commitments and contingencies.

+ References

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+ Details