Risk Management (Tables)

12 Months Ended

Dec. 31, 2011

As of December 31, 2011, we had entered into the following outstanding commodity forward contracts to hedge our forecasted energy commodity purchases and sales:

	Net open position long/(short)
Derivatives designated as hedging contracts
Crude oil	(20.9) million barrels
Natural gas fixed price	(11.4) billion cubic feet
Natural gas basis	(11.4) billion cubic feet
Derivatives not designated as hedging contracts
Natural gas basis	13.5 billion cubic feet

Fair Value of Derivative Contracts

Fair Value of Derivative Contracts

		Asset derivatives				Liability derivatives
		December 31,		December 31,		December 31,			December 31,
		2011		2010		2011			2010
	Balance sheet location	Fair value		Fair value		Fair value			Fair value
Derivatives designated as hedging contracts
Energy commodity derivative contracts	Current	$	65.3	$	20.1	$	(116.3	)	$	(275.9	)
	Non-current		39.4		43.1		(38.5	)		(103.0	)
Subtotal			104.7		63.2		(154.8	)		(378.9	)

Interest rate swap agreements	Current		3.0		-		-			-
	Non-current		592.5		217.6		-			(69.2	)
Subtotal			595.5		217.6		-			(69.2	)

Total			700.2		280.8		(154.8	)		(448.1	)

Derivatives not designated as hedging contracts
Energy commodity derivative contracts	Current		3.1		3.9		(4.5	)		(5.6	)
	Non-current		0.1		-		(0.2	)		-
Total			3.2		3.9		(4.7	)		(5.6	)

Total derivatives		$	703.4	$	284.7	$	(159.5	)	$	(453.7	)

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Effect of Derivative Contracts on the Income Statement

The following three tables summarize the impact of our derivative contracts on our accompanying consolidated statements of income for each of the years ended December 31, 2011 and 2010 (in millions):

Derivatives in fair value hedging relationships	Location of gain/(loss) recognized in income on derivative	Amount of gain/(loss) recognized in income on derivative(a)				Hedged items in fair value hedging relationships	Location of gain/(loss) recognized in income on related hedged item	Amount of gain/(loss) recognized in income on related hedged items(a)
		Year Ended December 31,						Year Ended December 31,
		2011		2010				2011			2010
Interest rate swap agreements	Interest, net - income/(expense)	$	520.1	$	302.0	Fixed rate debt	Interest, net - income/(expense)	$	(520.1	)	$	(302.0	)
Total		$	520.1	$	302.0	Total		$	(520.1	)	$	(302.0	)

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(a)	Amounts reflect the change in the fair value of interest rate swap agreements and the change in the fair value of the associated fixed rate debt which exactly offset each other as a result of no hedge ineffectiveness.

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Derivatives in cash flow hedging relationships	Amount of gain/(loss) recognized in OCI on derivative (effective portion)							Location of gain/(loss) reclassified from Accumulated OCI into income (effective portion)	Amount of gain/(loss) reclassified from Accumulated OCI into income (effective portion)								Location of gain/(loss) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)	Amount of gain/(loss) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)
	Year Ended December 31,								Year Ended December 31,									Year Ended December 31,
	2011			2010					2011				2010					2011			2010
Energy commodity derivative contracts		$	14.1		$	(76.1	)	Revenues-natural gas sales		$	3.3			$	8.2		Revenues-natural gas sales		$	-		$	-
								Revenues-product sales and other			(269.3	)			(211.3	)	Revenues-product sales and other			5.2			5.3
								Gas purchases and other costs of sales			10.7				14.7		Gas purchases and other costs of sales			-			-
Total		$	14.1		$	(76.1	)	Total		$	(255.3	)		$	(188.4	)	Total		$	5.2		$	5.3

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Derivatives not designated as hedging contracts	Location of gain/(loss) recognized in income on derivative	Amount of gain/(loss) recognized in income on derivative
		Year Ended December 31,
		2011			2010
Energy commodity derivative contracts	Gas purchases and other costs of sales	$	(0.2	)	$	2.3
Total		$	(0.2	)	$	2.3

Maximum Potential Exposure to Credit Losses on our Derivative Contracts

The maximum potential exposure to credit losses on our derivative contracts as of December 31, 2011 was (in millions):

	Asset position
Interest rate swap agreements	$	595.5
Energy commodity derivative contracts		107.9
Gross exposure		703.4
Netting agreement impact		(62.4	)
Net exposure	$	641.0

Additional Collateral Obligations

We also have agreements with certain counterparties to our derivative contracts that contain provisions requiring us to post additional collateral upon a decrease in our credit rating. Based on contractual provisions as of December 31, 2011, we estimate that if our credit rating was downgraded, we would have the following additional collateral obligations (in millions):

Credit ratings downgraded (a)	Incremental obligations		Cumulative obligations(b)
One notch to BBB-/Baa3	$	-	$	-

Two notches to below BBB-/Baa3 (below investment grade)	$	32.3	$	32.3

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(a)	If there are split ratings among the independent credit rating agencies, most counterparties use the higher credit rating to determine our incremental collateral obligations, while the remaining use the lower credit rating. Therefore, a two notch downgrade to below BBB-/Baa3 by one agency would not trigger the entire $32.3 million incremental obligation.
(b)	Includes current posting at current rating.