Unconsolidated investments at December 31, 2011 and 2010 include the Company's 50 percent investment in Citrus and investments in other entities. The Company accounts for these investments using the equity method. The Company's share of net earnings or loss from these equity investments is recorded in Earnings from unconsolidated investments in the Consolidated Statement of Operations.

The following table summarizes the Company's unconsolidated equity investments at the dates indicated.

	December 31,
	2011		2010

		(In thousands)

Citrus (1)	$	1,608,549	$	1,510,847
Other		24,740		27,701
	$	1,633,289	$	1,538,548

(1) See Note 3 – ETE Merger for information regarding the Company's intent for its ownership interest in Citrus to be merged with an ETP subsidiary.

The following tables set forth the summarized financial information for the Company's equity investments for the periods presented.

	December 31,
	2011					2010
				Other Equity					Other Equity
	Citrus			Investments		Citrus			Investments

		(In thousands)

Balance Sheet Data:
Current assets	$	260,530		$	8,247	$	107,108		$	14,106
Non-current assets		5,814,630			42,763		5,453,583			44,602
Current liabilities		847,505	(1)		1,149		316,952	(1)		2,139
Non-current liabilities		3,309,834			87		3,512,350			185

		Years Ended December 31,
	2011				2010				2009
			Other Equity				Other Equity				Other Equity
	Citrus		Investments		Citrus		Investments		Citrus		Investments

	(In thousands)
Statement of Operations Data:
Revenues	$	693,626	$	9,801	$	517,158	$	22,492	$	508,416	$	20,395
Operating income		391,707		3,222		269,789		12,323		271,897		13,765
Net earnings		185,380		2,892		180,927		12,273		129,683		13,680

Dividends. Citrus did not pay dividends to the Company during the years ended December 31, 2011, 2010 and 2009. Retained earnings at December 31, 2011 and 2010 included undistributed earnings from Citrus of $278.7 million and $181.1 million, respectively.

Citrus Excess Net Investment. The Company's equity investment balances include amounts in excess of the Company's share of the underlying equity of the investee of $650 million and $649 million as of December 31, 2011 and 2010, respectively. These amounts relate to the Company's 50 percent equity ownership interest in Citrus. The following table sets forth the excess net investment of the Company's 50 percent share of the underlying Citrus equity as of December 31, 2011.

		Excess		Amortization
		Purchase Costs		Period

		(In thousands)

Property, plant and equipment		$	2,885	40 years
Capitalized software			1,478	5 years
Long-term debt (1)			(80,204)	4-20 years
Deferred taxes (1)			(6,883)	40 years
Other net liabilities			(541)	N/A
Goodwill (2)			664,609	N/A
	Sub-total		581,344
Accumulated, net accretion to equity earnings			68,346
	Net investment in excess of underlying equity	$	649,690

Contingent Matters Potentially Impacting Southern Union Through the Company's Investment in Citrus

Florida Gas Phase VIII Expansion. Florida Gas' Phase VIII Expansion project was placed in-service on April 1, 2011, at an approximate cost of $2.5 billion, including capitalized equity and debt costs. To date, Florida Gas has entered into long-term firm transportation service agreements with shippers for 25-year terms accounting for approximately 74 percent of the available expansion capacity.

In 2011, CrossCountry Citrus, LLC (CrossCountry Citrus), an indirect wholly-owned subsidiary of the Company, and Citrus' other stockholder each made sponsor contributions of $37 million in the form of loans to Citrus, net of repayments. The Citrus loan has been recorded in Other non-current assets on the Consolidated Balance Sheet. The contributions are related to the costs of Florida Gas' Phase VIII Expansion project. In conjunction with anticipated sponsor contributions, Citrus has entered into a promissory note in favor of each stockholder for up to $150 million. The promissory notes have a final maturity date of March 31, 2014, with no principal payments required prior to the maturity date, and bear an interest rate equal to a one-month Eurodollar rate plus a credit spread of 1.5 percent. Amounts may be redrawn periodically under the notes to temporarily fund capital expenditures, debt retirements, or other working capital needs. Citrus' principal operating asset is Florida Gas, whose debt is rated Baa2 by Moody's Investor Services, Inc. and BBB by Standard & Poors.

In 2010, CrossCountry Citrus and Citrus' other stockholder each made a $100 million sponsor capital contribution in the form of equity to Citrus to partially fund the Phase VIII Expansion. The Company's $100 million capital contribution was funded using its credit facilities.

Florida Gas Rate Filing. On September 3, 2010, Florida Gas filed a settlement with FERC in full resolution of all issues set for hearing in its rate proceeding. The Administrative Law Judge certified the settlement on December 21, 2010. The settlement was approved by FERC on February 24, 2011 and became effective on April 1, 2011. The settlement results in an increase in certain of Florida Gas' rate schedules and a decrease in other rate schedules as compared to rates in effect prior to April 1, 2010, with a portion of such decrease not effective until October 1, 2010.

Florida Gas Debt Issuance. In July 2010, Florida Gas issued $500 million of 5.45% Senior Notes due July 15, 2020 with an offering price of $99.826 (per $100 principal) and $350 million of 4.00% Senior Notes due July 15, 2015 with an offering price of $99.982 (per $100 principal). Florida Gas used the net proceeds to partially fund the Phase VIII Expansion project and for general corporate purposes, which included the repayment of a portion of Florida Gas' outstanding debt. On July 19, 2010, Florida Gas (i) made a $98.6 million distribution to Citrus, (ii) repaid $83 million that was outstanding under its credit agreements, and (iii) invested the remainder of the proceeds. On August 19, 2010, Florida Gas redeemed its $325 million of 7.625% notes due December 1, 2010.

Retirement of Debt Obligations. As noted in the Citrus financial statements, Citrus expects to refinance Florida Gas' $250 million senior notes due July 2012 and extend the maturity or refinance both of the 2007 Citrus Revolver and the 2007 Florida Gas Revolver, each due August 2012. Alternatively, should Citrus not be successful in such efforts, Citrus may choose to retire such debt upon maturity by utilizing some combination of cash flows from operations, utilizing available funds on existing sponsor loans from its stockholders, requesting additional sponsor loans from its stockholders and altering the timing of controllable expenditures, among other things. Citrus has obtained commitment letters from each of its stockholders to make additional sponsor loans in the event that the repayment of the senior notes and revolvers is necessary. However, Citrus reasonably believes, based on its investment grade credit ratings and general financial condition, successful historical access to capital and debt markets and market expectations regarding Citrus' future earnings and cash flows, that it will be able to refinance and/or retire these obligations, as applicable, under acceptable terms prior to their maturity.

Environmental Matters. Florida Gas is responsible for environmental remediation of contamination resulting from past releases of hydrocarbons and chlorinated compounds at certain sites on its natural gas transmission systems. Florida Gas is implementing a program to remediate such contamination. Activities vary with site conditions and locations, the extent and nature of the contamination, remedial requirements and complexity. The ultimate liability and total costs associated with these sites will depend upon many factors. These sites are generally managed in the normal course of business or operations. The outcome of these matters is not expected to have a material adverse impact on the Company's equity investment in Citrus.

Regulatory Assets and Liabilities. Florida Gas is subject to regulation by certain state and federal authorities. Florida Gas has accounting policies that conform to regulatory accounting standards and are in accordance with the accounting requirements and ratemaking practices of applicable regulatory authorities. Florida Gas management's assessment of the probability of its recovery or pass through of regulatory assets and liabilities requires judgment and interpretation of laws and regulatory commission orders. If, for any reason, Florida Gas ceases to meet the criteria for application of regulatory accounting treatment for all or part of its operations, the regulatory assets and liabilities related to those portions ceasing to meet such criteria would be eliminated from its consolidated balance sheet, resulting in an impact to the Company's share of its equity earnings. Florida Gas' regulatory asset and liability balances at December 31, 2011 were $32.7 million and $12.8 million, respectively.

Florida Gas Pipeline Relocation Costs. The FDOT/FTE has various turnpike/State Road 91 widening projects that have impacted or may, over time, impact one or more of Florida Gas' mainline pipelines located in FDOT/FTE rights-of-way. Several FDOT/FTE projects are the subject of litigation in Broward County, Florida. On January 27, 2011, a jury awarded Florida Gas $82.7 million and rejected all damage claims by the FDOT/FTE. On May 2, 2011, the judge issued an order entitling Florida Gas to an easement of 15 feet on either side of its pipelines and 75 feet of temporary work space. The judge further ruled that Florida Gas is entitled to approximately $8 million in interest. In addition to ruling on other aspects of the easement, he ruled that pavement could not be placed directly over Florida Gas' pipeline without the consent of Florida Gas although Florida Gas would be required to relocate the pipeline if it did not provide such consent. He also denied all other pending post-trial motions. The FDOT/FTE filed a notice of appeal on July 12, 2011. Briefing to the Florida Fourth District Court of Appeals (4th DCA) is complete. The 4th DCA granted a request by the FDOT to expedite the appeal. Oral argument is set for March 7, 2012. Amounts ultimately received would primarily reduce Florida Gas' property, plant and equipment costs.

On April 14, 2011 Florida Gas filed suit against the FDOT/FTE, Dragados USA and I-595 Express, LLC in Broward County, Florida seeking an injunction and damages as the result of the construction of a mechanically stabilized earth wall and other encroachments in Florida Gas easements. The same judge that presided over the previously discussed FDOT/FTE proceeding was assigned to the case. Trial is expected to be set in the third quarter of 2012.

Federal Pipeline Integrity Rules. On December 15, 2003, the U.S. Department of Transportation issued a final rule requiring pipeline operators to develop integrity management programs to comprehensively evaluate their pipelines, and take measures to protect pipeline segments located in what the rule defines as HCAs. This rule resulted from the enactment of the Pipeline Safety Improvement Act of 2002. The rule required operators to identify HCAs along their pipelines and to complete baseline integrity assessments, comprised of in-line inspection (smart pigging), hydrostatic testing or direct assessment, by December 2012. Operators were required to rank the risk of their pipeline segments containing HCAs; assessments are generally conducted on the higher risk segments first. In addition, some system modifications will be necessary to accommodate the in-line inspections. As of December 31, 2011, Florida Gas had completed approximately 96 percent of the baseline risk assessments required to be completed by December 2012. While identification and location of all the HCAs has been completed, it is not practicable to determine with certainty the total scope of required remediation activities prior to completion of the assessments and inspections. The required modifications and inspections are currently estimated to be in the range of approximately $30 million to $40 million per year through 2012.

See Note 3 – ETE Merger for information related to the Citrus Merger, pursuant to which CrossCountry, a subsidiary of the Company that indirectly owns a 50 percent interest in Citrus, would become a wholly-owned subsidiary of ETP.

The Company has other investments in Grey Ranch, the Lee 8 partnership and PEI Power, which are also accounted for under the equity method. Grey Ranch operates a 200 MMcf/d carbon dioxide treatment facility. The Lee 8 partnership operates a 3.0 Bcf natural gas storage facility in Michigan. PEI Power II owns a 45-megawatt, natural gas-fired electric generation plant operated through a joint venture with Cayuga Energy in Pennsylvania.