Transactions with Affiliates

6 Months Ended

Jun. 30, 2011

Transactions with Affiliates [Abstract]

Transactions with Affiliates

5. Transactions with Affiliates

     Cash Management Program. We participate in El Paso’s cash management program which matches short-term cash surpluses and needs of participating affiliates, thus minimizing total borrowings from outside sources. El Paso uses the cash management program to settle intercompany transactions between participating affiliates. We have historically advanced cash to El Paso in exchange for an affiliated note receivable that is due upon demand. At June 30, 2011 and December 31, 2010, we had a note receivable from El Paso of $908 million and $836 million. At June 30, 2011, we have classified this receivable as noncurrent on our balance sheet as we do not anticipate using it in the next twelve months considering available cash sources and needs. The interest rate on this note is variable and was 2.4% and 1.5% at June 30, 2011 and December 31, 2010.

     In 2011, we utilized $21 million of our notes receivable from the cash management program to pay a dividend to our parent.

     Income Taxes. El Paso files consolidated U.S. federal and certain state tax returns which include our taxable income. In certain states, we file and pay taxes directly to the state taxing authorities. At June 30, 2011 and December 31, 2010, we had federal and state income taxes payable of $44 million and $24 million. The majority of these balances, as well as our deferred income taxes, will become payable to El Paso.

     Other Affiliate Balances. At June 30, 2011 and December 31, 2010, we had contractual deposits from our affiliates of $9 million included in other current liabilities on our balance sheets.

     Affiliate Revenues and Expenses. We enter into transactions with our affiliates within the ordinary course of business. For a further discussion of our affiliated transactions, see our 2010 Annual Report on Form 10-K. The following table shows revenues and charges from our affiliates:

	Quarter Ended				Six Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
			(In millions)
Revenues	$	6	$	4	$	10	$	9
Operation and maintenance expenses		19		18		37		36
Reimbursement of operating expenses		3		3		5		5