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EX-31.B - EXHIBIT 31.B - TENNESSEE GAS PIPELINE COMPANY, L.L.C.exhibit31b.htm
EX-32.B - EXHIBIT 32.B - TENNESSEE GAS PIPELINE COMPANY, L.L.C.exhibit32b.htm
EX-31.A - EXHIBIT 31.A - TENNESSEE GAS PIPELINE COMPANY, L.L.C.exhibit31a.htm
EX-32.A - EXHIBIT 32.A - TENNESSEE GAS PIPELINE COMPANY, L.L.C.exhibit32a.htm

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
 
Form 10-Q
(Mark One)

R
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the quarterly period ended March 31, 2011
   
 
OR
 
£
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the transition period from                                                       to

Commission File Number 1-4101
________________
 
Tennessee Gas Pipeline Company
(Exact Name of Registrant as Specified in Its Charter)

Delaware
74-1056569
(State or Other Jurisdiction
of  Incorporation or Organization)
(I.R.S. Employer
Identification No.)
   
El Paso Building
 
1001 Louisiana Street
Houston, Texas
77002
(Address of Principal Executive Offices)
(Zip Code)

Telephone Number: (713) 420-2600

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ No o

 Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes ¨ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 
Large accelerated filer o
   Accelerated filer o
Non-accelerated filer þ
    Small reporting company o
 
          (Do not check if a smaller reporting company)

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No þ

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

     Common stock, par value $5 per share. Shares outstanding on May 6, 2011: 208

     TENNESSEE GAS PIPELINE COMPANY MEETS THE CONDITIONS OF GENERAL INSTRUCTION H(1)(a) AND (b) TO FORM 10-Q AND IS THEREFORE FILING THIS REPORT WITH A REDUCED DISCLOSURE FORMAT AS PERMITTED BY SUCH INSTRUCTION.
 
 

 

 
____________
 * We have not included a response to this item in this document since no response is required pursuant to the reduced disclosure format permitted by General Instruction H to Form 10-Q.
     
     
  Below is a list of terms that are common to our industry and used throughout this document: 
     
 
/d = per day
BBtu = billion British thermal units
  TBtu = trillion British thermal units   
     
 
When we refer to “us,” “we,” “our,” or “ours,” we are describing Tennessee Gas Pipeline Company and/or our subsidiaries.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 


 
 


TENNESSEE GAS PIPELINE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions)
(Unaudited)

 
 
 
Quarter Ended
March 31,
 
 
 
2011
   
2010
 
                 
Operating revenues
  $ 234     $ 224  
                 
Operating expenses
               
Operation and maintenance
    75       73  
Depreciation and amortization
    48       48  
Taxes, other than income taxes
    16       14  
      139       135  
Operating income
    95       89  
Earnings from unconsolidated affiliate
    4       4  
Other income, net
    8       5  
Interest and debt expense
    (37 )     (38 )
Affiliated interest income, net
    3       3  
Income before income taxes
    73       63  
Income taxes
    28       24  
Net income
  $ 45     $ 39  

See accompanying notes.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
TENNESSEE GAS PIPELINE COMPANY
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts)
(Unaudited)

   
March 31,
2011
   
December 31,
2010
 
ASSETS
 
Current assets
           
Cash and cash equivalents
  $     $  
Accounts and notes receivable
               
Customer
    37       24  
Affiliates
    370       378  
Other
    45       51  
Materials and supplies
    44       44  
Deferred income taxes
    43       43  
Other
    5       5  
Total current assets
    544       545  
Property, plant and equipment, at cost
    4,974       4,951  
Less accumulated depreciation and amortization
    1,050       1,056  
      3,924       3,895  
Additional acquisition cost assigned to utility plant, net
    1,913       1,923  
Total property, plant and equipment, net
    5,837       5,818  
Other assets
               
Note receivable from affiliate
    608       617  
Investment in unconsolidated affiliate
    59       56  
Other
    78       76  
      745       749  
Total assets
  $ 7,126     $ 7,112  
                 
LIABILITIES AND STOCKHOLDER’S EQUITY
 
Current liabilities
               
Accounts payable
               
Trade
  $ 56     $ 90  
Affiliates
    34       38  
Other
    53       57  
Current maturities of long-term debt
    86       86  
Taxes payable
    14       23  
Contractual deposits
    28       28  
Asset retirement obligations
    29       28  
Accrued interest
    47       33  
Regulatory liabilities
    78       78  
Other
    36       38  
Total current liabilities
    461       499  
Long-term debt, less current maturities
    1,766       1,765  
Other liabilities
               
Deferred income taxes
    1,446       1,422  
Regulatory liabilities
    74       90  
Other
    33       35  
      1,553       1,547  
Commitments and contingencies (Note 3)
               
Stockholder’s equity
               
Common stock, par value $5 per share; 300 shares authorized; 208 shares issued and outstanding
           
Additional paid-in capital
    2,209       2,209  
Retained earnings
    1,137       1,092  
Total stockholder’s equity
    3,346       3,301  
Total liabilities and stockholder’s equity
  $ 7,126     $ 7,112  
 
See accompanying notes.
 
 
TENNESSEE GAS PIPELINE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)

   
Quarter Ended
March 31,
 
 
 
2011
   
2010
 
Cash flows from operating activities
           
Net income
  $ 45     $ 39  
Adjustments to reconcile net income to net cash from operating activities
               
 Depreciation and amortization
    48       48  
 Deferred income taxes
    24       11  
 Earnings from unconsolidated affiliate, adjusted for cash distributions
    (3 )     (1 )
 Other non-cash income items
    (6 )     (1 )
 Asset and liability changes
    (35 )     (35 )
Net cash provided by operating activities
    73       61  
                 
Cash flows from investing activities
               
Capital expenditures
    (96 )     (57 )
Net change in note receivable from affiliate
    23       (6 )
Other
          3  
Net cash used in investing activities
    (73 )     (60 )
                 
Net change in cash and cash equivalents
          1  
Cash and cash equivalents
               
Beginning of period
           
End of period
  $     $ 1  

See accompanying notes.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



 
TENNESSEE GAS PIPELINE COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

We prepared this Quarterly Report on Form 10-Q under the rules and regulations of the United States Securities and Exchange Commission. As an interim period filing presented using a condensed format, it does not include all of the disclosures required by U.S. generally accepted accounting principles, and you should read this report along with our 2010 Annual Report on Form 10-K. The financial statements as of March 31, 2011, and for the quarters ended March 31, 2011 and 2010, are unaudited. The condensed consolidated balance sheet as of December 31, 2010, was derived from the audited balance sheet filed in our 2010 Annual Report on Form 10-K. In our opinion, we have made adjustments, all of which are of a normal, recurring nature to fairly present our interim period results. Due to the seasonal nature of our business, information for interim periods may not be indicative of our operating results for the entire year.  Our disclosures in this Form 10-Q are an update to those provided in our 2010 Annual Report on Form 10-K.

Significant Accounting Policies

There were no changes in the significant accounting policies described in our 2010 Annual Report on Form 10-K and no significant accounting pronouncements issued but not yet adopted as of March 31, 2011.

2. Financial Instruments

At March 31, 2011 and December 31, 2010, the carrying amounts of cash and cash equivalents and trade receivables and payables represent fair value because of the short-term nature of these instruments. At March 31, 2011 and December 31, 2010, we had an interest bearing note receivable from El Paso Corporation (El Paso) of $953 million and $976 million due upon demand, with a variable interest rate of 1.5% at each balance sheet date.  While we are exposed to changes in interest income based on changes to the variable interest rate, the fair value of this note receivable approximates its carrying value due to the note being due on demand and the market-based nature of the interest rate.

In addition, the carrying amounts of our long-term debt and their estimated fair values, which are based on quoted market prices for the same or similar issues,  are as follows:

 
March 31, 2011
   
December 31, 2010
 
 
Carrying
Amount
 
Fair
Value
   
Carrying
Amount
   
Fair
Value
 
 
(In millions)
 
Long-term debt, including current maturities
$
1,852
 
$
2,167
   
$
1,851
   
$
2,071
 

3. Commitments and Contingencies

Legal Proceedings

We and our affiliates are named defendants in numerous legal proceedings and claims that arise in the ordinary course of our business. For each of these matters, we evaluate the merits of the case or claim, our exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If we determine that an unfavorable outcome is probable and can be estimated, we establish the necessary accruals. While the outcome of these matters cannot be predicted with certainty, and there are still uncertainties related to the costs we may incur, based upon our evaluation and experience to date, we believe we have established appropriate reserves for these matters.  It is possible, however, that new information or future developments could require us to reassess our potential exposure related to these matters and adjust our accruals accordingly, and these adjustments could be material.  As of March 31, 2011, we had accrued less than $1 million for all of our outstanding legal proceedings.
 
 

 
4

 
 
Rates and Regulatory Matter

Rate Case. In November 2010, we filed a rate case with the Federal Energy Regulatory Commission (FERC) proposing an increase in our base tariff rates, including a proposed change in our rate structure. In December 2010, the FERC issued an order accepting and suspending the effective date of the proposed rates to June 1, 2011, subject to refund, the outcome of a hearing and other proceedings. At this time, the outcome of this matter is not determinable.

Environmental Matters

We are subject to federal, state and local laws and regulations governing environmental quality and pollution control. These laws and regulations require us to remove or remedy the effect of the disposal or release of specified substances at current and former operating sites.  At March 31, 2011, our accrual was approximately $4 million for expected remediation costs and associated onsite, offsite and groundwater technical studies and for related environmental legal costs; however, we estimate that our exposure could be as high as $7 million.  Our accrual includes approximately $1 million for environmental contingencies related to properties we previously owned.

Our environmental remediation projects are in various stages of completion. Our recorded liabilities reflect our current estimates of amounts we will spend to remediate these sites. However, depending on the stage of completion or assessment, the ultimate extent of contamination or remediation required may not be known. As additional assessments occur or remediation efforts continue, we may incur additional liabilities.

Polychlorinated Biphenyls (PCB) Cost Recoveries and Refund. Since 1994, we have been conducting remediation activities at certain of our compressor stations associated with PCBs and other hazardous materials.  We have collected amounts, substantially in excess of remediation costs to date, through a surcharge to our customers under a settlement approved by the FERC in November of 1995. In November 2009, the FERC approved an amendment to the 1995 settlement that provides for interim refunds over a three year period of approximately $157 million of our collected amounts plus interest of 8%. Through March 31, 2011, we have refunded approximately $78 million to our customers.  Our refund obligations are recorded as regulatory liabilities on our balance sheet and as of March 31, 2011, we have classified approximately $78 million as current liabilities based on the timing of when these amounts are expected to be refunded to our customers.

Superfund Matters.  Included in our recorded environmental liabilities are projects where we have received notice that we have been designated or could be designated as a Potentially Responsible Party (PRP) under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), commonly known as Superfund, or state equivalents for four active sites. Liability under the federal CERCLA statute may be joint and several, meaning that we could be required to pay in excess of our pro rata share of remediation costs.  We consider the financial strength of other PRPs in estimating our liabilities. Accruals for these issues are included in the environmental reserve discussed above.

For 2011, we estimate that our total remediation expenditures will be approximately $1 million, most of which will be expended under government directed clean-up plans.  In addition, we expect to make capital expenditures for environmental matters of approximately $11 million in the aggregate for the remainder of 2011 through 2015, including capital expenditures associated with the impact of the Environmental Protection Agency rule on emissions of hazardous air pollutants from reciprocating internal combustion engines which are subject to regulations with which we have to be in compliance by October 2013.

It is possible that new information or future developments could require us to reassess our potential exposure related to environmental matters. We may incur significant costs and liabilities in order to comply with existing environmental laws and regulations. It is also possible that other developments, such as increasingly strict environmental laws, regulations and orders of regulatory agencies, as well as claims for damages to property and the environment or injuries to employees and other persons resulting from our current or past operations, could result in substantial costs and liabilities in the future. As this information becomes available, or other relevant developments occur, we will adjust our accrual amounts accordingly. While there are still uncertainties related to the ultimate costs we may incur, based upon our evaluation and experience to date, we believe our reserves are adequate.
 
 
 

 
 
5

 
 
Other Commitments

For a further discussion of our purchase obligations and other commercial commitments, see our 2010 Annual Report on Form   10-K.
 
4. Accounts Receivable Sales Program

We participate in an accounts receivable sales program where we sell receivables in their entirety to a third party financial institution (through a wholly-owned special purpose entity).  The sale of these accounts receivable (which are short-term assets that generally settle within 60 days) qualify for sale accounting.  The third party financial institution involved in our accounts receivable sales program acquires interests in various financial assets and issues commercial paper to fund those acquisitions.  We do not consolidate the third party financial institution because we do not have the power to control, direct, or exert significant influence over its overall activities since our receivables do not comprise a significant portion of its operations.

In connection with our accounts receivable sales, we receive a portion of the sales proceeds up front and receive an additional amount upon the collection of the underlying receivables (which we refer to as a deferred purchase price). Our ability to recover the deferred purchase price is based solely on the collection of the underlying receivables. The table below contains information related to our accounts receivable sales program.

   
Quarter Ended
March 31,
 
   
2011
   
2010
 
   
(In millions)
 
Accounts receivable sold to the third-party financial institution(1)
  $ 204     $ 227  
Cash received for accounts receivable sold under the program
    118       160  
Deferred purchase price related to accounts receivable sold 
    86       67  
Cash received related to the deferred purchase price
    84       85  
Amount paid in conjunction with terminated program(2)
          40  
_______________
(1)  
During the quarters ended March 31, 2011 and 2010, losses recognized on the sale of accounts receivable were immaterial.
(2)  
In January 2010, we terminated our previous accounts receivable sales program and paid $40 million to acquire the related senior interests in certain receivables under that program.  See our 2010 Annual Report on Form 10-K for further information.
 
   
March 31,
   
December 31,
 
   
2011
   
2010
 
   
(In millions)
 
Accounts receivable sold and held by third-party financial institution
  $ 76     $ 75  
Uncollected deferred purchase price related to accounts receivable sold(1)
    37       35  
_______________
(1)  
Initially recorded at an amount which approximates its fair value using observable inputs other than quoted prices in active markets.

The deferred purchase price related to the accounts receivable sold is reflected as other accounts receivable on our balance sheet. Because the cash received up front and the deferred purchase price relate to the sale or ultimate collection of the underlying receivables, and are not subject to significant other risks given their short term nature, we reflect all cash flows under the accounts receivable sales program as operating cash flows on our statement of cash flows. Under the accounts receivable sales program, we service the underlying receivables for a fee. The fair value of this servicing agreement, as well as the fees earned, were not material to our financial statements for the quarters ended March 31, 2011 and 2010.









 
5. Investment in Unconsolidated Affiliate and Transactions with Affiliates

Investment in Unconsolidated Affiliate

We have a 50 percent ownership interest in Bear Creek Storage Company, L.L.C. (Bear Creek), a joint venture with Southern Natural Gas Company, our affiliate.  For the quarters ended March 31, 2011 and 2010, we received $1 million and $3 million in cash distributions from Bear Creek.

Summarized financial information for our proportionate share of Bear Creek for the quarters ended March 31 is presented as follows:
 
 
2011
   
2010
 
   
(In millions)
 
Operating results data:
           
Operating revenues
  $ 5     $ 5  
Operating expenses
    1       1  
Income from continuing operations and net income
    4       4  

Transactions with Affiliates

Cash Management Program. We participate in El Paso’s cash management program which matches short-term cash surpluses and needs of participating affiliates, thus minimizing total borrowings from outside sources. El Paso uses the cash management program to settle intercompany transactions between participating affiliates. We have historically advanced cash to El Paso in exchange for an affiliated note receivable that is due upon demand. At March 31, 2011 and December 31, 2010, we had a note receivable from El Paso of $953 million and $976 million. We classified $345 million of this receivable as current on our balance sheet at March 31, 2011, based on the net amount we anticipate using in the next twelve months considering available cash sources and needs. The interest rate on this note is variable and was 1.5% at March 31, 2011 and December 31, 2010.

Income Taxes. El Paso files consolidated U.S. federal and certain state tax returns which include our taxable income. In certain states, we file and pay taxes directly to the state taxing authorities. At March 31, 2011 and December 31, 2010, we had a net current income tax receivable of $2 million and $4 million. The majority of these balances, as well as deferred income taxes and amounts associated with the resolution of unrecognized tax benefits, will become payable to or receivable from El Paso.

Other Affiliate Balances. At March 31, 2011 and December 31, 2010, we had contractual deposits from our affiliates of $10 million.  

Affiliate Revenues and Expenses. We enter into transactions with our affiliates within the ordinary course of business. For a further discussion of our affiliated transactions, see our 2010 Annual Report on Form 10-K. The following table shows revenues and charges from our affiliates for the quarters ended March 31:  

 
 
2011
   
2010
 
   
(In millions)
 
Revenues(1) 
  $ 43     $ 5  
Operation and maintenance expenses
    17       21  
Reimbursements of operating expenses
    17       15  
_______________
(1)  
During the first quarter of 2011, we sold 5.8 TBtu of natural gas not used in operations to our affiliate, El Paso Marketing, L.P.

 
 
 
 


 
 
The information required by this Item is presented in a reduced disclosure format pursuant to General Instruction H to Form 10-Q.    In addition, this Item updates, and should be read in conjunction with the information disclosed in our 2010 Annual Report on Form    10-K, and the financial statements and notes presented in Item 1 of this Quarterly Report on Form 10-Q.

Results of Operations

Beginning January 1, 2011, our management uses segment earnings before interest expense and income taxes (Segment EBIT) as a measure to assess the operating results and effectiveness of our business, which consists of consolidated operations as well as an investment in an unconsolidated affiliate. We believe Segment EBIT is useful to investors to provide them with the same measure used by our management to evaluate our performance and so that investors may evaluate our operating results without regard to our financing methods. We define Segment EBIT as net income adjusted for items such as (i) interest and debt expense, (ii) affiliated interest income, and (iii) income taxes. Segment EBIT may not be comparable to measures used by other companies. Additionally, Segment EBIT should be considered in conjunction with net income, income before income taxes and other performance measures such as operating income or operating cash flows. Below is a reconciliation of our Segment EBIT to net income, our throughput volumes and an analysis and discussion of our results for the quarter ended March 31, 2011 compared with the same period in 2010.

Operating Results:
   
2011
   
2010
 
   
(In millions,
except for volumes)
 
Operating revenues
  $ 234     $ 224  
Operating expenses
    (139 )     (135 )
Operating income
    95       89  
Earnings from unconsolidated affiliate
    4       4  
Other income, net
    8       5  
Segment EBIT
    107       98  
Interest and debt expense
    (37 )     (38 )
Affiliated interest income, net
    3       3  
Income taxes
    (28 )     (24 )
Net income
  $ 45     $ 39  
Throughput volumes (BBtu/d)
    6,424       5,491  

Segment EBIT Analysis:
   
Variance
 
    Operating Revenue    
Operating
Expense
   
 Other
   
Total
 
    Favorable/(Unfavorable)  
    (In millions)  
Gas not used in operations and other natural gas sales
  $ 9     $ 1     $     $ 10  
AFUDC on expansions
                3       3  
Operating and general and administrative expenses
          (3 )           (3 )
Other(1) 
    1       (2 )           (1 )
Total impact on Segment EBIT
  $ 10     $ (4 )   $ 3     $ 9  
_______________
(1)  
Consists of individually insignificant items.

 
 
 

 


Gas Not Used in Operations and Other Natural Gas Sales.  During the quarter ended March 31, 2011, our Segment EBIT was favorably impacted by $16 million due to higher volumes and realized prices on operational and other gas sales, partially offset by lower retained fuel volumes in excess of fuel used in operations and lower prices of approximately $11 million, as compared with the same period in 2010.  In addition, our Segment EBIT increased by $3 million due to favorable revaluations of retained fuel volumes.  Our future earnings may be impacted positively or negatively depending on changes in throughput and fluctuations in natural gas prices.  We continue to explore options to minimize the price volatility associated with these operational pipeline activities.  As a result of our rate case filed with the FERC which proposes an increase in base tariff rates effective June 1, 2011, the percentage of our revenues derived from reservations charges may increase and therefore may reduce the impacts to our Segment EBIT due to excess fuel recoveries.

AFUDC on Expansions. We capitalize a carrying cost (an allowance for funds used during construction or AFUDC) on funds related to our construction of long-lived assets that is recorded as other income on our income statements. During the quarter ended March 31, 2011, we benefited from an increase in other income of approximately $3 million associated with the equity portion of AFUDC primarily on our 300 Line Project.

Listed below are significant updates to our backlog of projects discussed further in our 2010 Annual Report on Form 10-K.

•  
300 Line Project.  In the first quarter of 2011, we began construction on the pipeline and the remaining compressor facilities and we expect to place the project in service in November 2011.
   
•  
Northeast Upgrade Project.  In March 2011, we filed an application with the FERC for certificate authorization to construct this project and we anticipate receiving approval in the fourth quarter of 2011.  The project is anticipated to be placed in service in November 2013.
 
Operating and General and Administrative Expenses.  During the quarter ended March 31, 2011, our operating and general and administrative expenses were higher compared to the same period in 2010 primarily due to higher payroll and professional fees, partially offset by lower allocated costs from El Paso.

Regulatory Matter

In November 2010, we filed a rate case with the FERC proposing an increase in base tariff rates, including a proposed change in our rate structure which is expected to increase the percentage of reservation revenues relative to revenues derived from excess fuel recoveries and throughput on our system.  These new base tariff rates would increase revenue by approximately $200 million annually over previously effective tariff rates.  In December 2010, the FERC issued an order accepting and suspending the effective date of the proposed rates to June 1, 2011, subject to refund, the outcome of a hearing and other proceedings.  At this time, the outcome of this matter is not determinable.
 
Affiliated Interest Income, Net

The following table shows the average advances due from El Paso and the average short-term interest rates for the quarters ended March 31:

   
2011
   
2010
 
   
(In millions, except for rates)
 
Average advance due from El Paso
  $ 970     $ 901  
Average short-term interest rate
    1.5 %     1.5 %

Income Taxes

Our effective tax rate of 38 percent for the quarters ended March 31, 2011 and 2010 was higher than the statutory rate of 35 percent primarily due to the effect of state income taxes.
 
 
 

 

 
Liquidity and Capital Resources

Our primary sources of liquidity are cash flows from operating activities and amounts available to us under El Paso’s cash management program while our primary uses of cash are for working capital, capital expenditures and debt service requirements. At March 31, 2011, we had a note receivable from El Paso of $953 million of which $345 million was classified as current based on the net amount we anticipate using in the next twelve months considering available cash sources and needs.  See Item 1, Financial Statements, Note 5 for a further discussion of El Paso’s cash management program.

Our cash capital expenditures for the quarter ended March 31, 2011 and our estimated capital expenditures for the remainder of this year to expand and maintain our system are listed below:

   
Quarter Ended
March 31, 2011
   
2011
Remaining
   
Total
 
   
(In millions)
 
Expansion
  $ 38     $ 474     $ 512  
Maintenance
    43       134       177  
Other(1) 
    15       86       101  
    $ 96     $ 694     $ 790  
_______________
(1)  
Relates to building renovations at our corporate facilities.

We believe we have adequate liquidity available to us to meet our capital requirements and our existing operating needs through cash flows from operating activities and amounts available to us under El Paso’s cash management program.  In addition to the cash management program above, we are eligible to borrow amounts available under El Paso’s $1.5 billion credit agreement and are only liable for amounts we directly borrow. As of March 31, 2011, El Paso had $909 million of capacity remaining and available to us and our affiliates under this credit agreement, and none of the amount outstanding under the facility was issued or borrowed by us. For a further discussion of this credit agreement, see our 2010 Annual Report on Form 10-K.  While we do not anticipate a need to directly access the financial markets in the remainder of 2011 for any of our operating activities or expansion capital needs based on liquidity available to us, market conditions may impact our ability to act opportunistically.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Commitments and Contingencies

For a further discussion of our commitments and contingencies, see Item 1, Financial Statements, Note 3 which is incorporated herein by reference and our 2010 Annual Report on Form 10-K.


Omitted from this report pursuant to the reduced disclosure format permitted by General Instruction H to Form 10-Q.


Evaluation of Disclosure Controls and Procedures

As of March 31, 2011, we carried out an evaluation under the supervision and with the participation of our management, including our President and Chief Financial Officer (CFO), as to the effectiveness, design and operation of our disclosure controls and procedures. This evaluation considered the various processes carried out under the direction of our disclosure committee in an effort to ensure that information required to be disclosed in the U.S. Securities and Exchange Commission reports we file or submit under the Securities Exchange Act of 1934, as amended (Exchange Act) is accurate, complete and timely. Our management, including our President and CFO, does not expect that our disclosure controls and procedures or our internal controls will prevent and/or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our President and CFO concluded that our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective as of March 31, 2011.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the first quarter of 2011 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 


See Part I, Item 1, Financial Statements, Note 3, which is incorporated herein by reference.


CAUTIONARY STATEMENTS FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions or beliefs that we believe to be reasonable; however, assumed facts almost always vary from actual results, and differences between assumed facts and actual results can be material, depending upon the circumstances. Where, based on assumptions, we or our management express an expectation or belief as to future results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis. We cannot assure you, however, that the stated expectation or belief will occur, be achieved or accomplished. The words “believe,” “expect,” “estimate,” “anticipate,” and similar expressions will generally identify forward-looking statements. All of our forward-looking statements, whether written or oral, are expressly qualified by these cautionary statements and any other cautionary statements that may accompany such forward-looking statements. In addition, we disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of this report.

Important factors that could cause actual results to differ materially from estimates or projections contained in forward-looking statements are described in our 2010 Annual Report on Form 10-K under Part I, Item 1A, Risk Factors. There have been no material changes in these risk factors since that report.


Omitted from this report pursuant to the reduced disclosure format permitted by General Instruction H to Form 10-Q.


Omitted from this report pursuant to the reduced disclosure format permitted by General Instruction H to Form 10-Q.



None.
 
 
 
 
 
 
 
 
 
 
 
 




The Exhibit Index is incorporated herein by reference.

The agreements included as exhibits to this report are intended to provide information regarding their terms and not to provide any other factual or disclosure information about us or the other parties to the agreements. The agreements may contain representations and warranties by the parties to the agreements, including us, solely for the benefit of the other parties to the applicable agreement and:
 
•  
•  
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

•  
•  
may have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

•  
may apply standards of materiality in a way that is different from what may be viewed as material to certain investors; and

•  
•  
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 


 

Pursuant to the requirements of the Securities Exchange Act of 1934, Tennessee Gas Pipeline Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
TENNESSEE GAS PIPELINE COMPANY
 
     
     
     
Date: May 6, 2011   
 /s/ Norman G. Holmes  
 
Norman G. Holmes
President
(Principal Executive Officer)
 
     
     
     
     
Date: May 6, 2011    
 /s/ John R. Sult  
 
John R. Sult
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
 
     
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
TENNESSEE GAS PIPELINE COMPANY

EXHIBIT INDEX
 
 

Each exhibit identified below is filed as a part of this report.
 

 Exhibit
Number
 
Description
 
  31.A
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
  31.B
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
  32.A
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  32.B
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

15