We are exposed to market risks related to the volatility of commodity prices. To manage the impact of volatility from these prices, we utilize various exchange-traded and OTC commodity financial instrument contracts. These contracts consist primarily of futures, swaps and options and are recorded at fair value in our consolidated balance sheets.

We use futures and basis swaps, designated as fair value hedges, to hedge our natural gas inventory stored in our Bammel storage facility. At hedge inception, we lock in a margin by purchasing gas in the spot market or off peak season and entering into a financial contract. Changes in the spreads between the forward natural gas prices and the physical inventory spot price result in unrealized gains or losses until the underlying physical gas is withdrawn and the related designated derivatives are settled. Once the gas is withdrawn and the designated derivatives are settled, the previously unrealized gains or losses associated with these positions are realized.

We use futures, swaps and options to hedge the sales price of natural gas we retain for fees in our intrastate transportation and storage segment and operational gas sales in our interstate transportation and storage segment. These contracts are not designated as hedges for accounting purposes.

We use NGL and crude derivative swap contracts to hedge forecasted sales of NGL and condensate equity volumes we retain for fees in our midstream segment whereby our subsidiaries generally gather and process natural gas on behalf of producers, sell the resulting residue gas and NGL volumes at market prices and remit to producers an agreed upon percentage of the proceeds based on an index price for the residue gas and NGL. These contracts are not designated as hedges for accounting purposes.

We utilize swaps, futures and other derivative instruments to mitigate the risk associated with market movements in the price of refined products and NGLs to manage our storage facilities and the purchase and sale of purity NGL. These contracts are not designated as hedges for accounting purposes.

We use futures and swaps to achieve ratable pricing of crude oil purchases, to convert certain expected refined product sales to fixed or floating prices, to lock in margins for certain refined products and to lock in the price of a portion of natural gas purchases or sales. These contracts are not designated as hedges for accounting purposes.

We use financial commodity derivatives to take advantage of market opportunities in our trading activities which complement our transportation and storage segment’s operations and are netted in cost of products sold in our consolidated statements of operations. We also have trading and marketing activities related to power and natural gas in our all other segment which are also netted in cost of products sold. As a result of our trading activities and the use of derivative financial instruments in our transportation and storage segment, the degree of earnings volatility that can occur may be

significant, favorably or unfavorably, from period to period. We attempt to manage this volatility through the use of daily position and profit and loss reports provided to our risk oversight committee, which includes members of senior management, and the limits and authorizations set forth in our commodity risk management policy.


	March 31, 2021		December 31, 2020
	Notional Volume	Maturity	Notional Volume	Maturity
Mark-to-Market Derivatives
(Trading)
Natural Gas (BBtu):
Basis Swaps IFERC/NYMEX (1)	21,125	2021-2022	(44,225)	2021-2022
Fixed Swaps/Futures	1,493	2021-2022	1,603	2021-2022



Power (Megawatt):
Forwards	408,800	2021-2029	1,392,400	2021-2029
Futures	(32,918)	2021-2022	18,706	2021-2022
Options – Puts	174,398	2021-2022	519,071	2021
Options – Calls	(202,034)	2021-2022	2,343,293	2021



(Non-Trading)
Natural Gas (BBtu):
Basis Swaps IFERC/NYMEX	(25,610)	2021-2022	(29,173)	2021-2022
Swing Swaps IFERC	(13,573)	2021	11,208	2021
Fixed Swaps/Futures	(18,425)	2021-2022	(53,575)	2021-2022
Forward Physical Contracts	(15,338)	2022	(11,861)	2021

NGLs (MBbls) – Forwards/Swaps	(2,759)	2021-2022	(5,840)	2021-2022
Refined Products (MBbls) – Futures	(1,724)	2021-2023	(2,765)	2021
Crude (MBbls) – Forwards/Swaps	(3,592)	2021-2022	—	—

Fair Value Hedging Derivatives
(Non-Trading)
Natural Gas (BBtu):
Basis Swaps IFERC/NYMEX	(14,068)	2021	(30,113)	2021
Fixed Swaps/Futures	(14,068)	2021	(30,113)	2021
Hedged Item – Inventory	14,068	2021	30,113	2021

We are exposed to market risk for changes in interest rates. To maintain a cost effective capital structure, we borrow funds using a mix of fixed rate debt and variable rate debt. We also manage our interest rate exposure by utilizing interest rate swaps to achieve a desired mix of fixed and variable rate debt. We also utilize forward starting interest rate swaps to lock in the rate on a portion of our anticipated debt issuances.


Term	Type(1)	Notional Amount Outstanding
		March 31, 2021		December 31, 2020

July 2021(2)	Forward-starting to pay a fixed rate of 3.55% and receive a floating rate	$	400	$	400
July 2022(2)	Forward-starting to pay a fixed rate of 3.80% and receive a floating rate	400		400

Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a loss to the Partnership. Credit policies have been approved and implemented to govern the Partnership’s portfolio of counterparties with the objective of mitigating credit losses. These policies establish guidelines, controls and limits to manage credit risk within approved tolerances by mandating an appropriate evaluation of the financial condition of existing and potential counterparties, monitoring agency credit ratings, and by implementing credit practices that limit exposure according to the risk profiles of the counterparties. Furthermore, the Partnership may, at times, require collateral under certain circumstances to mitigate credit risk as necessary. The Partnership also uses industry standard commercial agreements which allow for the netting of exposures associated with transactions executed under a single commercial agreement. Additionally, we utilize master netting agreements to offset credit exposure across multiple commercial agreements with a single counterparty or affiliated group of counterparties.

The Partnership’s counterparties consist of a diverse portfolio of customers across the energy industry, including petrochemical companies, commercial and industrial end-users, oil and gas producers, municipalities, gas and electric utilities, midstream companies and independent power generators. Our overall exposure may be affected positively or negatively by macroeconomic or regulatory changes that impact our counterparties to one extent or another. Currently, management does not anticipate a material adverse effect in our financial position or results of operations as a consequence of counterparty non-performance.

The Partnership has maintenance margin deposits with certain counterparties in the OTC market, primarily with independent system operators and with clearing brokers. Payments on margin deposits are required when the value of a derivative exceeds our pre-established credit limit with the counterparty. Margin deposits are returned to us on or about the settlement date for non-exchange traded derivatives, and we exchange margin calls on a daily basis for exchange traded transactions. Since the margin calls are made daily with the exchange brokers, the fair value of the financial derivative instruments are deemed current and netted in deposits paid to vendors within other current assets in the consolidated balance sheets.

For financial instruments, failure of a counterparty to perform on a contract could result in our inability to realize amounts that have been recorded on our consolidated balance sheets and recognized in our statement of operations or statement of comprehensive income (loss).


	Fair Value of Derivative Instruments
	Asset Derivatives				Liability Derivatives
	March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020
Derivatives designated as hedging instruments:
Commodity derivatives (margin deposits)	$	6	$	25	$	(12)	$	(32)
	6		25		(12)		(32)
Derivatives not designated as hedging instruments:
Commodity derivatives (margin deposits)	98		90		(164)		(166)
Commodity derivatives	162		53		(148)		(71)
Interest rate derivatives	—		—		(254)		(448)
	260		143		(566)		(685)
Total derivatives	$	266	$	168	$	(578)	$	(717)

The following table presents the fair value of our recognized derivative assets and liabilities on a gross basis and amounts offset on the consolidated balance sheets that are subject to enforceable master netting arrangements or similar arrangements:


		Asset Derivatives				Liability Derivatives
	Balance Sheet Location	March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020
Derivatives without offsetting agreements	Derivative liabilities	$	—	$	—	$	(254)	$	(448)
Derivatives in offsetting agreements:
OTC contracts	Derivative assets (liabilities)	162		53		(148)		(71)
Broker cleared derivative contracts	Other current assets (liabilities)	104		115		(176)		(198)
Total gross derivatives		266		168		(578)		(717)
Offsetting agreements:

Counterparty netting	Derivative assets (liabilities)	(146)		(44)		146		44
Counterparty netting	Other current assets (liabilities)	(92)		(64)		92		64



Total net derivatives		$	28	$	60	$	(340)	$	(609)

We disclose the non-exchange traded financial derivative instruments as derivative assets and liabilities on our consolidated balance sheets at fair value with amounts classified as either current or long-term depending on the anticipated settlement date.


	Location	Amount of Gain (Loss) Recognized in Income on Derivatives
		Three Months Ended March 31,
		2021		2020
Derivatives not designated as hedging instruments:
Commodity derivatives – Trading	Cost of products sold	$	3	$	5
Commodity derivatives – Non-trading	Cost of products sold	(42)		112

Interest rate derivatives	Gains (losses) on interest rate derivatives	194		(329)

Total		$	155	$	(212)