PANHANDLE EASTERN PIPE LINE COMPANY



FORWARD-LOOKING STATEMENTS AND RISK FACTORS

The MD&A of this Form 10-Q should be read along with the MD&A and other parts of
Panhandle's 2001 Form 10-K. This MD&A also refers to, and in some sections
specifically incorporates by reference, Panhandle's Condensed Notes to
Consolidated Financial Statements and should be read in conjunction with such
Statements and Notes. This report and other written and oral statements that
Panhandle may make contain forward-looking statements, as defined by the Private
Securities Litigation Reform Act of 1995. Panhandle's intentions with the use of
the words "anticipates," "believes," "estimates," "expects," "intends," and
"plans" and variations of such words and similar expressions, are solely to
identify forward-looking statements that involve risk and uncertainty. These
forward-looking statements are subject to various factors that could cause
Panhandle's actual results to differ materially from those anticipated in such
statements. Panhandle has no obligation to update or revise forward-looking
statements regardless of whether new information, future events or any other
factors affect the information contained in such statements. Panhandle does,
however discuss certain risk factors, uncertainties and assumptions in this MD&A
and in Item 1 of the 2001 Form 10-K in the section entitled "Forward-Looking
Statements Cautionary Factors and Uncertainties" and in various public filings
it periodically makes with the SEC.

In addition to any assumptions and other factors referred to specifically in
connection with such forward-looking statements, there are numerous factors that
could cause our actual results to differ materially from those contemplated in
any forward-looking statements. Such factors include our inability to predict
and/or control:

-    Results of the re-audit of CMS Energy, Consumers, Panhandle, and certain of
     their subsidiaries by Ernst & Young and the subsequent restatement of CMS
     Energy's, Consumers' and Panhandle's financial statements;

-    Achievement of operating synergies and revenue enhancements;

-    Capital and financial market conditions, including current price of CMS
     Energy's Common Stock, and the effect on the Pension Plan, interest rates
     and availability of financing to CMS Energy, Consumers, Panhandle or any of
     their affiliates and the energy industry;

-    CMS Energy, Consumers, Panhandle or any of their affiliates' securities
     ratings;

-    Market perception of the energy industry, CMS Energy, Consumers, Panhandle,
     or any of their affiliates;

-    Ability to successfully assess the capital markets;



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                                             PANHANDLE EASTERN PIPE LINE COMPANY


-    Factors affecting operations such as unusual weather conditions,
     catastrophic weather-related damage, maintenance or repairs, environmental
     incidents, or gas producer constraints;

-    National, regional and local economic, competitive, legislative, and
     regulatory conditions and developments;

-    Adverse regulatory or legal decisions, including environmental laws and
     regulations;

-    The increased competition caused by new pipeline and pipeline expansion
     projects that transport large additional volumes of natural gas to the
     Midwestern United States from Canada, which could reduce the volumes of gas
     transported by our natural gas transmission business or cause them to lower
     rates in order to meet competition;

-    Energy markets, including the timing and extent of unanticipated changes in
     commodity prices for oil, coal, natural gas liquids, electricity and
     certain related products due to lower or higher demand, shortages,
     transportation problems or other developments;

-    Technological developments in energy production, delivery and usage;

-    Changes in financial or regulatory accounting principles or policies;

-    The actual amount of goodwill impairment and related impact on earnings and
     the balance sheet which could negatively impact Panhandle's borrowing
     capacity;

-    Outcome, cost and other effects of legal and administrative proceedings,
     settlements, investigations and claims;

-    Disruptions in the normal commercial insurance and surety bond markets that
     may increase costs or reduce traditional insurance coverage, particularly
     terrorism and sabotage insurance and performance bonds;

-    Capital spending requirements for safety, environmental or regulatory
     requirements that could consume capital resources and also result in
     depreciation expense increases not covered by additional revenues;

-    Market and other risks associated with Panhandle's investment in the
     liquids pipeline business with the Centennial Pipeline venture;

-    Other business or investment considerations that may be disclosed from time
     to time in CMS Energy's, Consumers' or Panhandle's SEC filings or in other
     publicly disseminated written documents; and

-    Other uncertainties, which are difficult to predict and many of which are
     beyond our control.

In addition, there may be other matters which are unknown to Panhandle or are
currently believed to be immaterial.

Panhandle designed this discussion of potential risks and uncertainties, which
is by no means comprehensive, to highlight important factors that may impact
Panhandle's business and financial outlook.







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