Related Party Transactions

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements [Abstract]

Related Party Transactions

5. Related Party Transactions

		Years Ended December 31,
Related Party Transactions		2011		2010		2009
			(In thousands)
Transportation and storage
	of natural gas (1)	$	3,224	$	3,477	$	3,821
Operation and maintenance:
	Management and royalty fees		20,088		19,237		18,718
	Other expenses (2)		37,441		35,661		28,855
Other income, net:
	Interest income - Southern Union		1,767		1,373		1,376
	Interest income - CrossCountry Citrus		7,010		7,269		7,594
	Other		208		237		224

___________________________

• 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. See Note 8. Debt Obligations – LNG Holdings Term Loans for more information regarding this note receivable.

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.

Southern Union structured the acquisition of PEPL in a manner which qualified as a like-kind exchange of property under Section 1031 of the Code. For tax purposes, the Company's assets that were part of the exchange were recorded at the tax basis of the Southern Union Company assets for which they were exchanged. The resulting transaction generated an estimated deferred tax liability at the acquisition date and a corresponding receivable from Southern Union Company reflected as a reduction to Partners' Capital on the Company's Consolidated Balance Sheet. Repayment of the receivable from Southern Union Company is limited to actual tax liabilities otherwise payable by the Company pursuant to the tax sharing agreement with Southern Union Company. For the years ended December 31, 2011 and 2010, the Company recorded $2 million and $2 million of income tax liability settlements against the tax sharing note receivable, respectively, with a balance of $1.2 million remaining at December 31, 2011. The Company settles the intercompany income tax liability with Southern Union on an annual basis. The settlements, which are settled against the demand note with Southern Union, are reported as investing activities in the Consolidated Statement of Cash Flows.

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

		December 31,
		2011		2010
			(In thousands)
Notes receivable - related parties:
	Current:
	CrossCountry Citrus	$	342,386	$	-
	Noncurrent:
	Southern Union		688,330		455,280
	CrossCountry Citrus		-		368,126
		$	688,330	$	823,406
Accounts receivable - related parties (1)		$	6,319	$	5,922
Accounts payable - related parties:
	Southern Union - income taxes (2)	$	33,148	$	43,273
	Southern Union - other (3)		18,729		12,940
	Other (4)		178		180
		$	52,055	$	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 December 31, 2011 and 2010 amountsare net of insurance proceeds of$2.2 million 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.