Segment Information

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Information

Segment Information

Our reportable segments comprise revenue-generating components of the company for which we produce separate financial information internally that we regularly use to make operating decisions and assess performance. Our determination of reportable segments considers the strategic operating units under which we manage sales of various products and services to customers in differing regulatory environments. We manage our businesses through four reportable segments – distribution operations, retail operations, wholesale services and midstream operations. Our non-reportable segments are combined and presented as “other.”

Our distribution operations segment is the largest component of our business and includes natural gas local distribution utilities that construct, manage and maintain intrastate natural gas pipelines and distribution facilities in seven states. Although the operations of this segment are geographically dispersed, the operating subsidiaries within the segment have similar economic and risk characteristics as they are regulated utilities with rates determined by individual state regulatory agencies.

We are involved in several related and complementary businesses. Our retail operations segment includes retail natural gas marketing to end-use customers primarily in Georgia and Illinois. Retail operations also provides home equipment protection products and services. Our wholesale services segment engages in natural gas storage and gas pipeline arbitrage and related activities. Additionally, this segment provides natural gas asset management and/or related logistics services for each of our utilities except Nicor Gas, as well as for non-affiliated companies. Our midstream operations segment includes our non-utility storage and pipeline operations, including the operation of high-deliverability natural gas storage assets. Our other segment includes subsidiaries that are not significant on a stand-alone basis and that do not align with one of our reportable segments.

The chief operating decision maker of the company is the Chairman, President and Chief Executive Officer, who utilizes EBIT as the primary measure of profit and loss in assessing the results of each segment’s operations. EBIT includes operating income (loss) and other income and expenses and excludes income taxes and interest expense, which we evaluate on a consolidated basis. Summarized statements of income, balance sheets and capital expenditure information by segment as of, and for the periods presented, are shown in the following tables.

Three months ended June 30, 2016

In millions	Distribution operations		Retail operations		Wholesale services(1)			Midstream operations			Other			Intercompany eliminations			Consolidated
Operating revenues from external parties	$	509	$	149	$	(95	)	$	10		$	2		$	(4	)	$	571
Intercompany revenues	38		—		—			—			—			(38		)	—
Total operating revenues	547		149		(95		)	10			2			(42		)	571
Operating expenses
Cost of goods sold	144		83		1			4			—			(41		)	191
Operation and maintenance	164		31		14			6			—			(2		)	213
Depreciation and amortization	89		5		1			5			4			—			104
Taxes other than income taxes	33		1		1			1			1			—			37
Merger-related expenses	—		—		—			—			53			—			53
Total operating expenses	430		120		17			16			58			(43		)	598
Operating income (loss)	117		29		(112		)	(6		)	(56		)	1			(27		)
Other income	2		—		—			1			—			—			3
EBIT	$	119	$	29	$	(112	)	$	(5	)	$	(56	)	$	1		$	(24	)
Capital expenditures	$	280	$	2	$	1		$	25		$	5		$	—		$	313

Three months ended June 30, 2015

In millions	Distribution operations		Retail operations		Wholesale services(1)			Midstream operations			Other			Intercompany eliminations			Consolidated
Operating revenues from external parties	$	506	$	153	$	4		$	11		$	3		$	(3	)	$	674
Intercompany revenues	40		—		—			—			—			(40		)	—
Total operating revenues	546		153		4			11			3			(43		)	674
Operating expenses
Cost of goods sold	166		95		—			2			—			(41		)	222
Operation and maintenance	160		34		11			6			—			(2		)	209
Depreciation and amortization	83		6		1			4			4			—			98
Taxes other than income taxes	34		1		—			1			2			—			38
Total operating expenses	443		136		12			13			6			(43		)	567
Operating income (loss)	103		17		(8		)	(2		)	(3		)	—			107
Other income	3		—		—			—			1			—			4
EBIT	$	106	$	17	$	(8	)	$	(2	)	$	(2	)	$	—		$	111
Capital expenditures	$	248	$	2	$	—		$	7		$	7		$	—		$	264

Six months ended June 30, 2016

In millions	Distribution operations		Retail operations		Wholesale services (1)			Midstream operations			Other			Intercompany eliminations			Consolidated
Operating revenues from external parties	$	1,492	$	435	$	(32	)	$	25		$	4		$	(19	)	$	1,905
Intercompany revenues	83		—		—			—			—			(83		)	—
Total operating revenues	1,575		435		(32		)	25			4			(102		)	1,905
Operating expenses
Cost of goods sold	608		245		4			10			—			(98		)	769
Operation and maintenance	349		68		30			13			(2		)	(4		)	454
Depreciation and amortization	178		11		1			9			7			—			206
Taxes other than income taxes	89		2		2			2			4			—			99
Merger-related expenses	—		—		—			—			56			—			56
Total operating expenses	1,224		326		37			34			65			(102		)	1,584
Operating income (loss)	351		109		(69		)	(9		)	(61		)	—			321
Other income	2		—		1			3			—			—			6
EBIT	$	353	$	109	$	(68	)	$	(6	)	$	(61	)	$	—		$	327
Total assets	$	12,499	$	672	$	753		$	744		$	9,493		$	(9,673	)	$	14,488
Capital expenditures	$	484	$	4	$	1		$	43		$	16		$	—		$	548

Six months ended June 30, 2015

In millions	Distribution operations		Retail operations		Wholesale services(1)		Midstream operations			Other			Intercompany eliminations			Consolidated
Operating revenues from external parties	$	1,791	$	494	$	94	$	30		$	9		$	(23	)	$	2,395
Intercompany revenues	96		—		—		—			—			(96		)	—
Total operating revenues	1,887		494		94		30			9			(119		)	2,395
Operating expenses
Cost of goods sold	942		305		9		12			5			(116		)	1,157
Operation and maintenance	345		71		35		12			(2		)	(3		)	458
Depreciation and amortization	165		12		1		9			8			—			195
Taxes other than income taxes	105		2		1		2			4			—			114
Total operating expenses	1,557		390		46		35			15			(119		)	1,924
Operating income (loss)	330		104		48		(5		)	(6		)	—			471
Other income	4		—		—		1			2			—			7
EBIT	$	334	$	104	$	48	$	(4	)	$	(4	)	$	—		$	478
Total assets	$	11,796	$	636	$	806	$	686		$	9,190		$	(9,279	)	$	13,835
Capital expenditures	$	418	$	4	$	1	$	10		$	19		$	—		$	452

(1)The revenues for wholesale services are netted with costs associated with its energy and risk management activities. A reconciliation of our operating revenues and our intercompany revenues are shown in the following table.

In millions	Third party gross revenues		Intercompany revenues	Total gross revenues	Less gross gas costs	Operating revenues
Three months ended June 30, 2016	$	1,061	58	1,119	1,214	$	(95	)
Three months ended June 30, 2015	$	1,291	89	1,380	1,376	$	4
Six months ended June 30, 2016	$	2,500	143	2,643	2,675	$	(32	)
Six months ended June 30, 2015	$	3,436	239	3,675	3,581	$	94

Identifiable assets are those used in each segment’s operations. Information by segment on our Consolidated Balance Sheet as of December 31, 2015, is as follows:

In millions	Distribution operations		Retail operations		Wholesale services		Midstream operations		Other		Intercompany eliminations			Consolidated
Total assets	$	12,517	$	686	$	935	$	692	$	9,664	$	(9,740	)	$	14,754