Equity Method Investments

3 Months Ended

Apr. 30, 2011

Equity Method Investments [Abstract]

Equity Method Investments

8.       Equity Method Investments

The consolidated financial statements include the accounts of wholly owned subsidiaries whose investments in joint venture, energy-related businesses are accounted for under the equity method. Our ownership interest in each entity is included in “Equity method investments in non-utility activities” in the consolidated balance sheets. Earnings or losses from equity method investments are included in “Income from equity method investments” in the consolidated statements ofincome.

We own 21.49% of the membership interests in Cardinal Pipeline Company, L.L.C. (Cardinal), a North Carolina limited liability company. Cardinal owns and operates an intrastate natural gas pipeline in North Carolina and is regulated by the North Carolina Utilities Commission (NCUC).

On October 22, 2009, we reached an agreement with Progress Energy Carolinas, Inc. to provide natural gas delivery service to a power generation facility to be built at their Wayne County, North Carolina site. To provide the additional delivery service, we have executed an agreement with Cardinal, which was approved by the NCUC in May 2010, to expand our firm capacity requirement by 149,000 dekatherms per day to serve Progress Energy Carolinas. This will require Cardinal to spend as much as $53.1 million for a new compressor station and expanded meter stations in order to increase the capacity of its system by up to 199,000 dekatherms per day of firm capacity for us and another customer. As an equity venture partner of Cardinal, we will invest as much as $11.4 million in Cardinal's system expansion. Capital contributions related to this system expansion beganin January 2011 and will continue on a periodic basis through September 2012. As of April 30, 2011, our contributions to date related to this expansion were $3.9 million.

The members' capital will be replaced with permanent financing with a target overall capital structure of 45-50% debt and 50-55% equity after the project is placed into service, scheduled to be July 1, 2012. In addition, our service subscription to Cardinal's capacity following the system expansion will increase from approximately 37% to approximately 53%. The NCUC issued a formal certificate order for Progress Energy Carolinas for their Wayne County generation project in October 2009.

We have related party transactions as a transportation customer of Cardinal, and we record in cost of gas the transportation costs charged by Cardinal. For each period of thethree months and six months ended April 30, 2011 and 2010, these transportation costs and the amounts we owed Cardinal as of April 30, 2011 and October 31, 2010 are as follows.

		Three Months				Six Months
In thousands		2011		2010		2011		2010
Transportation costs	$	1,001	$	1,001	$	2,035	$	2,035
		April 30,		October 31,
		2011		2010
Trade accounts payable	$	337	$	349

We own 40% of the membership interests in Pine Needle LNG Company, L.L.C. (Pine Needle), aNorth Carolina limited liability company. Pine Needle owns aninterstate liquefied natural gas (LNG) storage facility in North Carolina and is regulated by the Federal Energy Regulatory Commission (FERC).

We have related party transactions as a customer of Pine Needle, and we record in cost of gas the storage costs charged by Pine Needle. For each period of the three months and six months ended April 30, 2011 and 2010, these gas storage costs and the amounts we owed Pine Needle as of April 30, 2011 and October 31, 2010 are as follows.

		Three Months				Six Months
In thousands		2011		2010		2011		2010
Gas storage costs	$	2,714	$	3,104	$	5,641	$	6,313
		April 30,		October 31,
		2011		2010
Trade accounts payable	$	840	$	985

We own 15% of the membership interestsin SouthStar Energy Services LLC (SouthStar), a Delaware limited liability company. The other member is Georgia Natural Gas Company (GNGC), a wholly-owned subsidiary of AGL Resources, Inc.SouthStar primarily sells natural gas to residential, commercial and industrial customers in the southeastern United States and Ohio with most of its business being conducted in the unregulated retail gas market in Georgia. On January 1, 2010,we sold half of our 30%membership interest in SouthStar to GNGC and retained a 15% earnings and membership share in SouthStar after the sale. At closing, we received $57.5 million from GNGC, whohas no further rights to acquire our remaining 15% interest. We continue to account for our 15% membership interest in SouthStar using the equity method, as we retain board representation with voting rights equal to GNGC on significant governance matters and policy decisions, and thus, exercise significant influence over the operations of SouthStar.

We have related party transactions as we sell wholesale gas supplies to SouthStar, and we record in operating revenues the amounts billed to SouthStar. For each period of the three months and six months ended April 30, 2011 and 2010, our operating revenues from these sales and the amounts SouthStar owedus as of April 30, 2011 and October 31, 2010 are as follows.

		Three Months				Six Months
In thousands		2011		2010		2011		2010
Operating revenues	$	666	$	1,124	$	635	$	1,061
		April 30,		October 31,
		2011		2010
Trade accounts receivable	$	744	$	713

Piedmont Hardy Storage Company, LLC, a wholly owned subsidiary of Piedmont, owns 50% of the membership interests in Hardy Storage Company, LLC (Hardy Storage), a West Virginia limited liability company. The other owner is a subsidiary of Columbia Gas Transmission Corporation, a subsidiary of NiSource Inc. Hardy Storage owns and operates an underground interstate natural gas storage facility located in Hardy and Hampshire Counties, West Virginia that is regulated by the FERC.

We have related party transactions as a customer of Hardy Storage and record in cost of gas the storage costs charged by Hardy Storage.For each period of the three months and six months ended April 30, 2011 and 2010, these gas storage costs and the amounts we owed Hardy Storage as of April 30, 2011 and October 31, 2010 are as follows.

		Three Months				Six Months
In thousands		2011		2010		2011		2010
Gas storage costs	$	2,425	$	2,300	$	4,851	$	4,535
		April 30,		October 31,
		2011		2010
Trade accounts payable	$	780	$	808