Related Party Transactions

9 Months Ended

Jun. 30, 2011

Related Party Transactions [Abstract]

Related Party Transactions

10. Related Party Transactions

UGI provides certain financial and administrative services to UGI Utilities. UGI bills UGI Utilities monthly for all direct expenses incurred by UGI on behalf of UGI Utilities and an allocated share of indirect corporate expenses incurred or paid with respect to services provided to UGI Utilities. The allocation of indirect UGI corporate expenses to UGI Utilities utilizes a weighted, three-component formula comprising revenues, operating expenses and net assets employed and considers UGI Utilities’ relative percentage of such items to the total of such items for all UGI operating subsidiaries for which general and administrative services are provided. Management believes that this allocation method is reasonable and equitable to UGI Utilities and this allocation method has been accepted by the PUC in past rate case proceedings and management audits as a reasonable method of allocating such expenses. These billed expenses are classified as operating and administrative expenses — related parties in the Condensed Consolidated Statements of Income. In addition, UGI Utilities provides limited administrative services to UGI and certain of UGI’s subsidiaries, principally payroll-related services. Amounts billed to these entities by UGI Utilities for all periods presented were not material.

From time to time, UGI Utilities is a party to SCAAs with Energy Services. At June 30, 2011, UGI Utilities was a party to two three-year SCAAs with Energy Services expiring October 31, 2012 and October 31, 2013 and, during the periods covered by the financial statements, was a party to other SCAAs with Energy Services. Under the SCAAs, UGI Utilities has, among other things, and subject to recall for operational purposes, released certain storage and transportation contracts to Energy Services for the terms of the SCAAs. UGI Utilities also transferred certain associated storage inventories upon the commencement of the SCAAs, receives a transfer of storage inventories at the end of the SCAAs, and makes payments associated with refilling storage inventories during the term of the SCAAs. Energy Services, in turn, provides a firm delivery service and makes certain payments to UGI Utilities for its various obligations under the SCAAs. UGI Utilities incurred costs associated with Energy Services’ SCAAs totaling $16,566 and $19,156 during the three and nine months ended June 30, 2011, respectively, and $6,783 and $14,362 during the three and nine months ended June 30, 2010, respectively. In conjunction with the SCAAs, UGI Utilities received security deposits from Energy Services. The amounts of such security deposits, which are included in other current liabilities on the Condensed Consolidated Balance Sheets, were $15,000, $7,500 and $7,500 as of June 30, 2011, September 30, 2010 and June 30, 2010, respectively.

UGI Utilities reflects the historical cost of the gas storage inventories and any exchange receivable from Energy Services (representing amounts of natural gas inventories used but not yet replenished by Energy Services) on its balance sheet under the caption “Inventories.” The carrying value of these gas storage inventories at June 30, 2011, comprising approximately 4.0 bcf of natural gas, was $19,035. The carrying value of these gas storage inventories at September 30, 2010, comprising approximately 4.1 bcf of natural gas, was $20,749. The carrying value of these gas storage inventories at June 30, 2010, comprising approximately 2.2 bcf of natural gas, was $12,140.

UGI Utilities has gas supply and delivery service agreements with Energy Services pursuant to which Energy Services provides certain gas supply and related delivery service to Gas Utility during the heating season months of November through March. The amount of these transactions (exclusive of transactions pursuant to the SCAAs) during the nine months ended June 30, 2011 and 2010 totaled $30,093 and $25,941, respectively. There were no such transactions during the three months ended June 30, 2011 or 2010.

From time to time, the Company sells natural gas or pipeline capacity to Energy Services. During the three and nine months ended June 30, 2011, revenues associated with such sales to Energy Services totaled $13,529 and $74,589, respectively. During the three and nine months ended June 30, 2010, such revenues totaled $15,489 and $43,074, respectively. Also from time to time, the Company purchases natural gas or pipeline capacity from Energy Services (in addition to those transactions already described above) and beginning April 1, 2011, purchases a firm storage service from UGI Storage Company, a subsidiary of Energy Services, under a one-year contract. During the three and nine months ended June 30, 2011, the aggregate amount of such transactions totaled $9,351 and $44,849, respectively. During the three and nine months ended June 30, 2010, such transactions totaled $7,145 and $22,034, respectively. These transactions did not have a material effect on the Company’s financial position, results of operations or cash flows.