Document And Entity Information
Document And Entity Information | 6 Months Ended |
Jun. 30, 2021shares | |
Document and Entity Information [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Transition Report | false |
Amendment Flag | false |
Entity Registrant Name | Panhandle Eastern Pipe Line Company, LP |
Entity Central Index Key | 0000076063 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Document Period End Date | Jun. 30, 2021 |
Entity File Number | 1-2921 |
Entity Address, Address Line One | 8111 Westchester Drive |
Entity Address, Address Line Two | Suite 600 |
Entity Address, City or Town | Dallas |
Entity Address, State or Province | TX |
Entity Address, Postal Zip Code | 75225 |
City Area Code | 214 |
Local Phone Number | 981-0700 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2021 |
Document Fiscal Period Focus | Q2 |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | false |
Entity Small Business | false |
Entity Shell Company | false |
Entity Tax Identification Number | 44-0382470 |
Entity Incorporation, State or Country Code | DE |
Entity Common Stock, Shares Outstanding | 0 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 0 | $ 0 |
Accounts receivable, net | 48 | 47 |
Accounts receivable from related companies | 6 | 8 |
Exchanges receivable | 8 | 6 |
Inventories | 110 | 86 |
Other current assets | 2 | 6 |
Total current assets | 174 | 153 |
Property, Plant and Equipment, Net [Abstract] | ||
Property, plant and equipment | 3,374 | 3,349 |
Accumulated depreciation | (768) | (717) |
Property, Plant and Equipment, Net, Total | 2,606 | 2,632 |
Operating Lease, Right-of-Use Asset | 4 | 5 |
Other non-current assets, net | 177 | 169 |
Total assets | 2,961 | 2,959 |
Liabilities, Current [Abstract] | ||
Accounts Payable and Accrued Liabilities, Current | 38 | 4 |
Accounts Payable, Related Parties, Current | 17 | 14 |
Exchanges payable | 84 | 71 |
Other Liabilities, Current | 48 | 33 |
Liabilities, Current, Total | 187 | 122 |
Long-term Debt and Lease Obligation | 244 | 245 |
Notes Payable, Related Parties, Noncurrent | 306 | 550 |
Operating Lease, Liability, Noncurrent | 4 | 5 |
Other Liabilities, Noncurrent | 268 | 243 |
Commitments and Contingencies | ||
Partners' Capital [Abstract] | ||
Partners' Capital | 1,956 | 1,803 |
Accumulated Other Comprehensive Income (Loss), Net of Tax | (4) | (9) |
Partners' Capital, Total | 1,952 | 1,794 |
Liabilities and Equity, Total | $ 2,961 | $ 2,959 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
OPERATING REVENUES: | |||||
Total operating revenues | $ 115 | $ 126 | $ 326 | $ 270 | |
OPERATING EXPENSES: | |||||
Operating and maintenance | 47 | 39 | 87 | 89 | |
General and administrative | 9 | 9 | 18 | 19 | |
Depreciation and amortization | 26 | 26 | 52 | 52 | |
Total operating expenses | 82 | 74 | 157 | 160 | |
OPERATING INCOME | 33 | 52 | 169 | 110 | |
OTHER INCOME (EXPENSE): | |||||
Interest expense, net | (3) | (3) | (7) | (7) | |
Interest expense — related company | (4) | (8) | (10) | (17) | |
Other, net | 0 | 3 | 0 | (4) | |
INCOME BEFORE INCOME TAX EXPENSE (BENEFIT) | 26 | 44 | 152 | 82 | |
Income tax expense | 0 | 1 | 0 | (1) | |
NET INCOME | 26 | $ 126 | 43 | 152 | 83 |
OTHER COMPREHENSIVE INCOME, NET OF TAX | |||||
Actuarial gain relating to postretirement benefit plans | 0 | $ 6 | 4 | 6 | 9 |
COMPREHENSIVE INCOME | 26 | 47 | 158 | 92 | |
Natural Gas, US Regulated [Member] | |||||
OPERATING REVENUES: | |||||
Transportation and storage of natural gas | 111 | 122 | 317 | 261 | |
Product and Service, Other [Member] | |||||
OPERATING REVENUES: | |||||
Transportation and storage of natural gas | $ 4 | $ 4 | $ 9 | $ 9 |
CONSOLIDATED STATEMENT OF PARTN
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL - USD ($) $ in Millions | Total | Limited partner | Accumulated Other Comprehensive Loss |
Stockholders' Equity, Balance | $ 1,602 | $ 1,626 | $ (24) |
Other Comprehensive Income (Loss), Net of Tax | 5 | 0 | 5 |
Net income | 40 | 40 | 0 |
Stockholders' Equity, Other | 4 | (4) | 0 |
Net income | 83 | ||
Non-cash activity - Settlement of related company payables | 4 | ||
Payments to Acquire Property, Plant, and Equipment | (35) | ||
Stockholders' Equity, Balance | 1,651 | 1,670 | (19) |
Other Comprehensive Income (Loss), Net of Tax | 4 | 0 | 4 |
Net income | 43 | 43 | 0 |
Stockholders' Equity, Balance | 1,698 | 1,713 | (15) |
Stockholders' Equity, Balance | 1,794 | 1,803 | (9) |
Other Comprehensive Income (Loss), Net of Tax | 6 | 0 | 6 |
Net income | 126 | 126 | 0 |
Stockholders' Equity, Other | 0 | (1) | 1 |
Net income | 152 | ||
Non-cash activity - Settlement of related company payables | 0 | ||
Payments to Acquire Property, Plant, and Equipment | (26) | ||
Stockholders' Equity, Balance | 1,926 | 1,930 | (4) |
Net income | 26 | 26 | 0 |
Stockholders' Equity, Balance | $ 1,952 | $ 1,956 | $ (4) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
OPERATING ACTIVITIES: | ||
Net income | $ 152 | $ 83 |
Reconciliation of net income to net cash provided by operating activities: | ||
Net income | 152 | 83 |
Depreciation and amortization | 52 | 52 |
Increase (Decrease) in Deferred Income Taxes | 0 | 1 |
Amortization of deferred financing fees | (1) | (1) |
Other Noncash Income (Expense) | (5) | (3) |
Increase (Decrease) in Other Operating Assets and Liabilities, Net | (62) | 0 |
Net Cash Provided by (Used in) Operating Activities | 270 | 136 |
Deferred income taxes | 0 | (1) |
Other non-cash | 5 | 3 |
Changes in operating assets and liabilities | 62 | 0 |
Net Cash Provided by (Used in) Operating Activities | 270 | 136 |
INVESTING ACTIVITIES: | ||
Capital expenditures | (26) | (35) |
Net cash flows used in investing activities | (26) | (35) |
FINANCING ACTIVITIES: | ||
Related company note activity | 244 | 101 |
Net cash flows used in financing activities | (244) | (101) |
Net change in cash and cash equivalents | 0 | 0 |
Cash and cash equivalents, beginning of period | 0 | 0 |
Cash and cash equivalents, end of period | 0 | 0 |
SUPPLEMENTAL INFORMATION: | ||
Non-cash activity - Accrued capital expenditures | 4 | 7 |
Non-cash activity - Settlement of related company payables | 0 | 4 |
Cash paid for interest | $ 8 | $ 8 |
Operations and Organization (No
Operations and Organization (Notes) | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Operations and Organization | ORGANIZATION AND BASIS OF PRESENTATION Organization PEPL and its subsidiaries primarily operates interstate pipelines that transport natural gas from the Gulf of Mexico, South Texas and the Panhandle region of Texas and Oklahoma to major United States markets in the Midwest and Great Lakes regions, as well as natural gas storage assets. These operations are subject to the rules and regulations of the FERC. PEPL’s subsidiaries are Trunkline, Sea Robin and Southwest Gas. Southern Union Panhandle LLC, an indirect wholly-owned subsidiary of ET, owns a 1% general partner interest in PEPL, and ET indirectly owns a 99% limited partner interest in PEPL. Prior to April 1, 2021, ETO owned Southern Union Panhandle LLC as well as the 99% limited partner interest in PEPL. On April 1, 2021, ETO merged with and into ET with ET surviving the merger. Basis of Presentation The unaudited financial information included in this Form 10-Q has been prepared on the same basis as the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. In the opinion of the Company’s management, such financial information reflects all adjustments necessary for a fair presentation of the financial position and the results of operations for such interim periods in accordance with GAAP. All intercompany items and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of the SEC. Use of Estimates The unaudited consolidated financial statements have been prepared in conformity with GAAP, which includes the use of estimates and assumptions made by management that affect the reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and liabilities that exist at the date of the consolidated financial statements. Although these estimates are based on management’s available knowledge of current and expected future events, actual results could be different from those estimates. |
Related Party Transactions (Not
Related Party Transactions (Notes) | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS The following table provides a summary of the related party activity included in our consolidated statements of operations: Three Months Ended Six Months Ended 2021 2020 2021 2020 Operating revenues $ 22 $ 22 $ 45 $ 44 Operating and maintenance 5 2 8 5 General and administrative 7 6 13 13 Interest expense — related company 4 8 10 17 As of June 30, 2021 and December 31, 2020, the Company had $306 million and $550 million, respectively, outstanding under a note payable to its parent. The note payable accrues interest monthly with an annual interest rate of 4.96% as of June 30, 2021 and matures on July 31, 2027. |
FAIR VALUE MEASURES (Notes)
FAIR VALUE MEASURES (Notes) | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures [Text Block] | FAIR VALUE MEASURESAs of June 30, 2021 and December 31, 2020, other non-current assets included $37 million and $34 million, respectively, of available-for-sale securities carried at fair value. At June 30, 2021, $24 million in equity securities were valued at Level 1 and $13 million in fixed income securities were valued at Level 2. At December 31, 2020, $22 million in equity securities were valued at Level 1 and $12 million in fixed income securities were valued at Level 2. During the three months ended June 30, 2021 and 2020, the Company recognized $1 million and $3 million in unrealized gains, respectively, on available-for-sale securities. During the six months ended June 30, 2021 and 2020, the Company recognized $3 million in unrealized gains and $2 million in unrealized losses, respectively, on available-for-sale securities. Unrealized gains and losses on available-for-sale securities are reflected in other, net in our consolidated statements of operations. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value. Based on the estimated borrowing rates currently available to the Company and its subsidiaries for loans with similar terms and average maturities, the aggregate fair value of the Company’s consolidated debt obligations (excluding related company balances) was $258 million and $256 million at June 30, 2021 and December 31, 2020, respectively. The fair value of the Company’s consolidated debt obligations is a Level 2 valuation based on the observable inputs used for similar liabilities. The Company did not have any Level 3 instruments measured at fair value at June 30, 2021 or December 31, 2020, and there were no transfers between hierarchy levels during the periods presented. |
Regulatory Matters, Commitments
Regulatory Matters, Commitments, Contingencies and Environmental (Notes) | 6 Months Ended |
Jun. 30, 2021 | |
Regulatory Matters, Commitments, Contingencies And Environmental Liabilities [Abstract] | |
Commitments and Contingencies Disclosure | REGULATORY MATTERS, COMMITMENTS, CONTINGENCIES AND ENVIRONMENTAL LIABILITIES Contingent Residual Support Agreement with ET Under a contingent residual support agreement with ET (as successor by merger to ETO) and Citrus ETP Finance LLC, the Company provides contingent, residual support to Citrus ETP Finance LLC (on a non-recourse basis to the Company) with respect to Citrus ETP Finance LLC’s obligations to ET to support the payment of $2 billion in principal amount of ET senior notes, of which $1 billion matures in each of 2022 and 2042. FERC Proceedings By order issued January 16, 2019, the FERC initiated a review of Panhandle’s existing rates pursuant to Section 5 of the Natural Gas Act (“NGA”) to determine whether the rates currently charged by Panhandle are just and reasonable and set the matter for hearing. On August 30, 2019, Panhandle filed a general rate proceeding under Section 4 of the NGA. The Natural Gas Act Section 5 and Section 4 proceedings were consolidated by order of the Chief Judge on October 1, 2019. A hearing in the combined proceedings commenced on August 25, 2020 and adjourned on September 15, 2020. The initial decision by the administrative law judge was issued on March 26, 2021. On April 26, 2021, Panhandle filed its brief on exceptions to the initial decision. On May 17, 2021, Panhandle filed its brief opposing exceptions in this proceeding. 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 regulations, 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. 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 polychlorinated biphenyls (“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 Company’s 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 potentially responsible parties. 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. The Company had accrued $1 million in non-current liabilities as of June 30, 2021 and December 31, 2020 to cover environmental remediation actions where management believes a loss is probable and reasonably estimable. The Company is not able to estimate the possible loss or range of loss in excess of amounts accrued. The Company does not have any material environmental remediation matters assessed as reasonably possible. Liabilities for Litigation and Other Claims The Company records accrued liabilities for litigation and other claim costs when management believes a loss is probable and reasonably estimable. When management believes there is at least a reasonable possibility that a material loss or an additional material loss may have been incurred, the Company discloses (i) an estimate of the possible loss or range of loss in excess of the amount accrued; or (ii) a statement that such an estimate cannot be made. As of June 30, 2021 and December 31, 2020, the Company had accrued liabilities for litigation and other contingencies of $56 million and $41 million, respectively, included in other non-current liabilities on the consolidated balance sheets. The Company does not have any material litigation or other claim contingency matters assessed as probable or reasonably possible that would require disclosure in the financial statements. Other Commitments and Contingencies The Company is subject to the laws and regulations of states and other jurisdictions concerning the identification, reporting and escheatment (the transfer of property to the state) of unclaimed or abandoned funds, and is subject to audit and examination for compliance with these requirements. The Company is currently being examined by a third party auditor on behalf of nine states for compliance with unclaimed property laws. |
OPERATIONS AND ORGANIZATION (Po
OPERATIONS AND ORGANIZATION (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Significant Accounting Policies [Text Block] | Basis of Presentation The unaudited financial information included in this Form 10-Q has been prepared on the same basis as the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. In the opinion of the Company’s management, such financial information reflects all adjustments necessary for a fair presentation of the financial position and the results of operations for such interim periods in accordance with GAAP. All intercompany items and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of the SEC. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The unaudited consolidated financial statements have been prepared in conformity with GAAP, which includes the use of estimates and assumptions made by management that affect the reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and liabilities that exist at the date of the consolidated financial statements. Although these estimates are based on management’s available knowledge of current and expected future events, actual results could be different from those estimates. |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions [table text block] | The following table provides a summary of the related party activity included in our consolidated statements of operations: Three Months Ended Six Months Ended 2021 2020 2021 2020 Operating revenues $ 22 $ 22 $ 45 $ 44 Operating and maintenance 5 2 8 5 General and administrative 7 6 13 13 Interest expense — related company 4 8 10 17 |
Operations and Organization (De
Operations and Organization (Details) - Panhandle [Member] | 6 Months Ended |
Jun. 30, 2021 | |
Description of the Business | |
General partnership interest | 1.00% |
Limited partnership interest | 99.00% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Related Party Transactions [Abstract] | ||||
Operating revenues | $ 22 | $ 22 | $ 45 | $ 44 |
Operating and maintenance | 5 | 2 | 8 | 5 |
General and administrative | 7 | 6 | 13 | 13 |
Interest Expense, Related Party | $ 4 | $ 8 | $ 10 | $ 17 |
Related Party (Narrative) (Deta
Related Party (Narrative) (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Related Party Transaction [Line Items] | |||
Notes Payable, Related Parties, Noncurrent | $ 306 | $ 550 | |
Deemed contribution from partners | $ 0 | $ 4 | |
ETO [Member] | |||
Related Party Transaction [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.96% |
FAIR VALUE MEASURES (Details)
FAIR VALUE MEASURES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Investments, Fair Value Disclosure | $ 37,000 | $ 37,000 | $ 34,000 | ||
Available-for-sale Securities, Gross Unrealized Gain | 1,000 | $ 3,000 | 3,000 | ||
Debt Instrument, Fair Value Disclosure | 258,000 | 258,000 | 256,000 | ||
Estimated litigation liability | 56,000 | 56,000 | 41,000 | ||
Accrued Environmental Loss Contingencies, Noncurrent | 1,000 | 1,000 | |||
Available-for-sale Securities, Gross Unrealized Loss | $ 2,000 | ||||
Equity Securities [Member] | |||||
Investments, Fair Value Disclosure | 24,000 | 24,000 | 22,000 | ||
Fixed Income Securities [Member] | |||||
Investments, Fair Value Disclosure | $ 13,000 | $ 13,000 | $ 12,000 |
Regulatory Matters, Commitmen_2
Regulatory Matters, Commitments, Contingencies and Environmental (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
Regulatory Matters, Commitments, Contingencies And Environmental Liabilities [Abstract] | ||
Accrued Environmental Loss Contingencies, Noncurrent | $ 1,000 | |
Estimated litigation liability | 56,000 | $ 41,000 |
Contingent Residual Support Agreement, Amount | 2,000,000 | |
Contingent Residual Support Agreement | ||
Other Commitments [Line Items] | ||
Senior Notes | $ 1,000,000 |