Kinder Morgan : Fourth Quarter 2025 2025 TGP Fourth Quarter Report
KMI
Published on 04/16/2026 at 05:14 pm EDT
CONSOLIDATED FINANCIAL STATEMENTS
With Report of Independent Auditors
TENNESSEE GAS PIPELINE COMPANY, L.L.C.
As of December 31, 2025 and 2024 and
For the Years Ended December 31, 2025 and 2024
TENNESSEE GAS PIPELINE COMPANY, L.L.C. AND SUBSIDIARY
TABLE OF CONTENTS
Page Number
Report of Independent Auditors
1
Consolidated Financial Statements
Consolidated Statements of Income and Comprehensive Income
3
Consolidated Balance Sheets
4
Consolidated Statements of Cash Flows
5
Consolidated Statements of Member's Equity
6
Notes to Consolidated Financial Statements
7
Report of Independent Auditors
To the Management of Tennessee Gas Pipeline Company, L.L.C.:
Opinion
We have audited the accompanying consolidated financial statements of Tennessee Gas Pipeline Company, L.L.C. (the "Company"), which comprise the consolidated balance sheets as of December 31, 2025 and 2024, and the related consolidated statements of income and comprehensive income, of member's equity and of cash flows for the years then ended, including the related notes (collectively referred to as the "consolidated financial statements").
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date the consolidated financial statements are available to be issued.
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.
In performing an audit in accordance with US GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Houston, Texas April 16, 2026
2025
2024
Revenues
$ 2,076
$ 1,868
Operating Costs and Expenses
Operations and maintenance
474
425
Depreciation and amortization
264
251
General and administrative
91
86
Taxes, other than income taxes
118
112
Other income
(9)
(9)
Total Operating Costs and Expenses
938
865
Operating Income
1,138
1,003
Other Income (Expense)
Earnings from equity investment
7
7
Interest, net
(114)
(116)
Other, net
21
9
Total Other Expense
(86)
(100)
Income Before Income Taxes
1,052
903
Income Tax Expense
(2)
(1)
Net Income
1,050
902
Other Comprehensive Income
Adjustments to postretirement benefit plan
3
2
Comprehensive Income
$ 1,053
$ 904
The accompanying notes are an integral part of these consolidated financial statements.
2025
2024
ASSETS
Current assets
Cash and cash equivalents
$ -
$ -
Accounts receivable
196
187
Inventories
66
62
Regulatory assets
30
16
Natural gas imbalance receivable
20
15
Other current assets
9
7
Total current assets
321
287
Property, plant, and equipment, net
6,996
6,608
Goodwill
3,250
3,250
Investment
84
83
Regulatory assets
142
153
Deferred charges and other assets
157
173
Total Assets
$ 10,950
$ 10,554
LIABILITIES AND MEMBER'S EQUITY
Current liabilities
Accounts payable
$ 136
$ 173
Accrued interest
28
28
Accrued taxes
68
67
Contractual deposits
19
18
Contractual liabilities
16
10
Natural gas imbalance payable
26
14
Other current liabilities
6
14
Total current liabilities
299
324
Long-term liabilities and deferred credits
Long-term debt
2,240
2,240
Debt fair value adjustments
108
128
Other long-term liabilities and deferred credits
111
114
Total long-term liabilities and deferred credits
2,459
2,482
Total Liabilities
2,758
2,806
Commitments and contingencies (Note 9)
Member's Equity
Member's equity
8,186
7,745
Accumulated other comprehensive income
6
3
Total Member's Equity
8,192
7,748
Total Liabilities and Member's Equity
$ 10,950
$ 10,554
The accompanying notes are an integral part of these consolidated financial statements.
2025
2024
Cash Flows From Operating Activities
Net income
$ 1,050
$ 902
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
264
251
Earnings from equity investment
(7)
(7)
Other non-cash items
(21)
(19)
Distributions from equity investment earnings
6
3
Changes in components of working capital:
Accounts receivable
(9)
(17)
Accounts payable
10
(7)
Other current assets and liabilities
(12)
(16)
Other long-term assets and liabilities
(23)
10
Net Cash Provided by Operating Activities
1,258
1,100
Cash Flows From Investing Activities
Capital expenditures
(635)
(664)
Net change in note receivable from affiliate
-
34
Asset disposal costs, net of salvage
(13)
(28)
Other, net
(1)
(7)
Net Cash Used in Investing Activities
(649)
(665)
Cash Flows From Financing Activities
Contributions from Member
409
395
Distributions to Member
(1,018)
(830)
Net Cash Used in Financing Activities
(609)
(435)
Net Change in Cash and Cash Equivalents
-
-
Cash and Cash Equivalents, beginning of period
-
-
Cash and Cash Equivalents, end of period
$ -
$ -
Non-cash Investing and Financing Activities
Net affiliate receivables settled by reduction of Member's equity
$ -
$ (1)
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest (net of capitalized interest) 120 120
The accompanying notes are an integral part of these consolidated financial statements.
2025
2024
Beginning Balance
$ 7,748
$ 7,280
Net income
1,050
902
Contributions
409
395
Distributions
(1,018)
(831)
Other comprehensive income
3
2
Ending Balance
$ 8,192
$ 7,748
The accompanying notes are an integral part of these consolidated financial statements.
We are a Delaware limited liability company, originally formed in 1947 as a corporation. When we refer to "us," "we," "our," "the Company," or "TGP," we are describing Tennessee Gas Pipeline Company, L.L.C. and its consolidated subsidiary. We are an indirect wholly owned subsidiary of Kinder Morgan, Inc. (KMI). References to KMI are inclusive of Kinder Morgan Inc. and its consolidated subsidiaries.
Our operations are regulated by the Federal Energy Regulatory Commission (FERC) under the Natural Gas Act of 1938, the Natural Gas Policy Act of 1978, and the Energy Policy Act of 2005. The FERC approves tariffs that establish rates, cost recovery mechanisms, and other terms and conditions of service to our customers.
Our primary business consists of the interstate transportation and storage of natural gas. Our natural gas pipeline system consists of approximately 11,780 miles of pipeline with a design capacity of approximately 14.6 billion cubic feet (Bcf) per day. This multiple-line system begins in the natural gas producing regions of Louisiana and South Texas and extends to the northeast region of the United States (U.S.), including the metropolitan areas of New York City and Boston. Our system connects with multiple pipelines (including interconnects at the U.S. and Mexico border and the U.S. and Canada border) and connects to four major shale formations, providing customers with access to diverse resources of supply and various natural gas markets. Along our pipeline system, we have approximately 76 Bcf of underground working natural gas storage capacity through partially owned facilities or long-term contracts. Of this total storage capacity, approximately 29.6 Bcf is contracted from Bear Creek Storage Company, L.L.C. (Bear Creek), located in Bienville Parish, Louisiana. Bear Creek is a joint venture equally owned by us and Southern Natural Gas Company, L.L.C. (SNG), an affiliate. The Bear Creek facility has approximately 59.2 Bcf of working natural gas storage capacity that is committed equally between SNG and us.
Basis of Presentation
We have prepared our accompanying consolidated financial statements in accordance with the accounting principles contained in the Financial Accounting Standards Board's (FASB) Accounting Standards Codification, the single source of U.S. Generally Accepted Accounting Principles. Additionally, certain amounts from the prior year have been reclassified to conform to the current presentation.
Management has evaluated subsequent events through April 16, 2026, the date the financial statements were available to be issued.
Principles of Consolidation
We consolidate entities when we have the ability to control or direct the operating and financial decisions of the entity or when we have a significant interest in the entity that gives us the ability to direct the activities that are significant to that entity. The determination of our ability to control, direct, or exert significant influence over an entity involves the use of judgment. All significant intercompany items have been eliminated in consolidation.
Use of Estimates
Certain amounts included in or affecting our financial statements and related disclosures must be estimated, requiring us to make certain assumptions with respect to values or conditions which cannot be known with certainty at the time our financial statements are prepared. These estimates and assumptions affect the amounts we report for assets and liabilities, our revenues and expenses during the reporting period, and our disclosures, including those related to contingent assets and liabilities at the date of our financial statements. We evaluate these estimates on an ongoing basis, utilizing historical experience, consultation with experts, and other methods we consider reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from our estimates. Any effects on our businesses, financial position, or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known.
Certain accounting policies are of more significance in our financial statement preparation process than others, and set out below are the principal accounting policies we apply in the preparation of our consolidated financial statements.
Cash Equivalents
We define cash equivalents as all highly liquid short-term investments with original maturities of three months or less.
Allowance for Credit Losses
We evaluate our financial assets measured at amortized cost and off-balance sheet credit exposures for expected credit losses over the contractual term of the asset or exposure. We consider available information relevant to assessing the collectability of cash flows including the expected risk of credit loss even if that risk is remote. We measure expected credit losses on a collective (pool) basis when similar risk characteristics exist and we reflect the expected credit losses on the amortized cost basis of the financial asset as of the reporting date.
Our financial instruments primarily consist of our accounts receivable from customers. We utilized historical analysis of credit losses experienced over the previous five years along with current conditions and reasonable and supportable forecasts of future conditions in our evaluation of collectability of our financial assets.
Inventories
Our inventories, which consist of materials and supplies, are valued at weighted-average cost, and we periodically review for physical deterioration and obsolescence.
Natural Gas Imbalances
Natural gas imbalances occur when the amount of natural gas delivered from or received by a pipeline system or storage facility differs from the scheduled amount of gas to be delivered or received. We value these imbalances due to or from shippers and operators at current index prices. Imbalances are settled in cash or made up in-kind, subject to the terms of our FERC tariff. Imbalances due from others are reported on our accompanying Consolidated Balance Sheets in "Natural gas imbalance receivable." Imbalances owed to others are reported on our accompanying Consolidated Balance Sheets in "Natural gas imbalance payable." We classify all imbalances due from or owed to others as current as we expect to settle them within a year.
Property, Plant, and Equipment, net
Our property, plant, and equipment is recorded at its original cost of construction or, upon acquisition, at either the fair value of the assets acquired or the cost to the entity that first placed the asset in utility service. For constructed assets, we capitalize all construction-related direct labor and material costs, as well as indirect construction costs. Our indirect construction costs primarily include an interest and equity return component (as more fully described below) and labor and related costs associated with supporting construction activities. The indirect capitalized labor and related costs are based upon estimates of time spent supporting construction projects. We expense costs for routine maintenance and repairs in the period incurred.
We use the composite method to depreciate property, plant, and equipment. Under this method, assets with similar economic characteristics are grouped and depreciated as one asset. The FERC-accepted depreciation rate is applied to the total cost of the group until the net book value equals the salvage value. For certain general plant, the asset is depreciated to zero. As part of periodic filings with the FERC, we also re-evaluate and receive approval for our depreciation rates. When property, plant, and equipment is retired, accumulated depreciation and amortization is charged for the original cost of the assets in addition to the cost to remove, sell, or dispose of the assets, less salvage value. We do not recognize gains or losses unless we sell land or an entire operating unit (as approved by the FERC). In those instances where we receive recovery in rates related to losses on dispositions of operating units, we record a regulatory asset for the estimated recoverable amount. For additional information on our regulatory asset associated with the sale of certain of our assets, refer to Note 8 "Accounting for Regulatory Activities-Regulatory Assets and Liabilities-Unamortized loss on sale of assets."
Included in our property balances are base gas and working gas at our storage facilities. We periodically evaluate natural gas volumes at our storage facilities for gas losses. When events or circumstances indicate a loss has occurred, we recognize a loss on our accompanying Consolidated Statements of Income and Comprehensive Income or defer the loss as a regulatory asset on our accompanying Consolidated Balance Sheets if deemed probable of recovery through future rates charged to customers.
We capitalize a carrying cost (an allowance for funds used during construction or AFUDC) on debt and equity funds related to the construction of long-lived assets. This carrying cost consists of a return on the investment financed by debt and a return on the investment financed by equity. The debt portion is calculated based on our average cost of debt. Interest costs capitalized are included as a reduction in "Interest, net" on our accompanying Consolidated Statements of Income and Comprehensive Income. The equity portion is calculated based on our most recent FERC-approved rate of return. Equity amounts capitalized are included in "Other, net" on our accompanying Consolidated Statements of Income and Comprehensive Income.
Asset Retirement Obligations (ARO)
We record liabilities for obligations related to the retirement and removal of long-lived assets used in our businesses. We record, as liabilities, the fair value of ARO on a discounted basis when they are incurred and can be reasonably estimated, which is typically at the time the assets are installed or acquired. Amounts recorded for the related assets are increased by the amount of these obligations. Over time, the liabilities increase due to the change in their present value, and the initial capitalized costs are depreciated over the useful lives of the related assets. The liabilities are eventually extinguished when the asset is taken out of service.
We are required to operate and maintain our natural gas pipelines and storage systems, and intend to do so as long as demand for our services exists, which we expect for the foreseeable future. Therefore, we believe that we cannot reasonably estimate the ARO for our assets because these assets have indeterminate lives. We continue to evaluate our ARO and future developments could impact the amounts we record.
Long-lived Asset and Investment Impairments
We evaluate our long-lived assets and investment for impairment when events or changes in circumstances indicate that the carrying values may not be recoverable. These events include changes in the manner in which we intend to use a long-lived asset, decisions to sell an asset or investment, and adverse changes in market conditions, or in the legal or business environment, such as adverse actions by regulators. If an event occurs, which is a determination that involves judgment, we evaluate the recoverability of our long-lived asset or investment based on its ability to generate future cash flows. If an impairment is indicated, or if we decide to sell a long-lived asset or group of assets, we adjust the carrying value of the asset or investment downward, if necessary, to its estimated fair value.
We evaluate the recoverability of our long-lived assets using a two-step approach. To determine if a long-lived asset is recoverable, we compare the asset's estimated undiscounted cash flows to its carrying value. If the carrying value of a long-lived asset or asset group is in excess of estimated undiscounted cash flows, we typically use discounted cash flow analyses to calculate the fair value of the long-lived asset to determine if an impairment is required and the amount of the impairment losses to be recognized.
We evaluate our equity method investment for other-than-temporary impairment. When an other-than-temporary impairment is recognized, the loss is recorded as a reduction in equity earnings.
Our fair value estimates are based on assumptions market participants would use, including market data obtained through the sales process or an analysis of expected discounted future cash flows. There were no events indicated or impairments for the years ended December 31, 2025 and 2024.
Equity Method of Accounting
We use the equity method of accounting for investments which we do not control, but for which we have the ability to exercise significant influence. Under this method, our equity investment is carried originally at our acquisition cost, increased by our proportionate share of the investee's net income and by contributions made, and decreased by our proportionate share of the investee's net losses and by distributions received.
Goodwill
Goodwill is the cost of an acquisition of a business in excess of the fair value of acquired assets and liabilities and is recorded as an asset on our balance sheet. Goodwill is not subject to amortization but must be tested for impairment at least annually and in interim periods if indicators of impairment exist. This test requires us to assign goodwill to an appropriate reporting unit and compare the fair value of a reporting unit to its carrying value. If the carrying value of a reporting unit
exceeds its fair value, an impairment is measured and recorded at the amount by which the reporting unit's carrying value exceeds its fair value.
We evaluate goodwill for impairment on May 31 of each year, or more frequently to the extent events occur or conditions change between annual tests that would indicate a risk of possible impairment at the interim period. For this purpose, we have only one reporting unit. Generally, the evaluation of goodwill for impairment involves a quantitative test, although under certain circumstances an initial qualitative evaluation may be sufficient to conclude that goodwill is not impaired without conducting the quantitative test.
We determine the fair value of our reporting unit based on a market approach utilizing enterprise value to estimated earnings before interest, income taxes, depreciation and amortization multiples of comparable companies. The value of the reporting unit is determined on a standalone basis from the perspective of a market participant in an orderly transaction between market participants at the measurement date. The results of our May 31, 2025 annual impairment test indicated that the reporting unit fair value exceeded the carrying value. The fair value estimate of our reporting unit was based on Level 3 inputs of the fair value hierarchy.
Revenue Recognition
Revenue from Contracts with Customers
We recognize revenue when control of the promised goods or services is transferred to customers and in an amount that reflects the consideration we expect to receive for those goods or services. Review of our contracts with customers may involve management judgment and an analysis of the contract's material terms.
Our revenues are primarily generated from the transportation and storage of natural gas under firm and/or fee-based service contracts and natural gas sales contracts. The natural gas we receive under our services contracts remains under the control of our customers. Revenues are generally invoiced on a monthly basis.
Services Contracts
Under our firm service contracts, customers are generally subject to a fixed take-or-pay reservation fee for services. Our performance obligation is a promise to stand ready to provide continuous service availability, with limited exceptions, over the contractual service period (a single performance obligation). Because we make the service continuously available over the service period, even if the service is not used or received, we recognize the take-or-pay fixed fee as revenue ratably over the contractual service period based on the passage of time, as the service period expires.
Under our fee-based service contracts, customers receive non-firm or interruptible services, on an "as available" basis. Upon acceptance of a customer's periodic service request, our performance obligation is a promise to provide a series of periodic services over the contractual service period (a single performance obligation). The transaction price is variable, typically a fee-based per unit rate based on our invoicing right for units of service transferred, and is allocated to a single performance obligation of providing services over the contractual service period. We recognize revenue as each unit of service is transferred to the customer in the specified service period.
Natural Gas Sales Contracts
Our natural gas sales contracts typically include a specified quantity of natural gas to be delivered and sold to the customer at a specified delivery point. Generally, under these contracts, each unit of natural gas sold is a separate performance obligation, and the transaction price is variable, typically based on a market-indexed per unit rate, for the value of natural gas sold. The transaction price is allocated to each performance obligation based on the standalone selling price of natural gas sold. Revenue is recognized upon delivery of the natural gas and generally accounted for on a gross basis with the related cost reported in "Operations and maintenance" in our accompanying Consolidated Statements of Income and Comprehensive Income.
Contract Balances
Contract assets and contract liabilities are the result of timing differences between revenue recognition, billings, and cash collections.
Environmental Matters
We capitalize certain environmental expenditures required to obtain rights-of-way, regulatory approvals, or permitting as part of the construction of facilities we use in our business operations. We accrue and expense environmental costs that relate to an existing condition caused by past operations, which do not contribute to current or future revenue generation. We generally do not discount environmental liabilities to a net present value, and we record environmental liabilities when environmental assessments and/or remedial efforts are probable and we can reasonably estimate the costs, such as after the completion of a feasibility study or commitment to a formal plan of action. We recognize receivables for anticipated associated insurance recoveries when such recoveries are deemed to be probable.
We routinely conduct reviews of potential environmental issues and claims that assist us in identifying environmental issues and estimating the costs and timing of remediation efforts. We also routinely adjust our environmental liabilities to reflect changes in previous estimates. In making environmental liability estimations, we consider the material effect of environmental compliance, pending legal actions against us, and potential third-party liability claims we may have against others. Often, as the remediation evaluation and effort progresses, additional information is obtained, requiring revisions to estimated costs. Refer to Note 9 "Litigation, Environmental and Commitments-Environmental Matters" for further information.
Postretirement Benefits
We participate in KMI's postretirement benefit plan covering certain of our former employees that we have made contributions to in the past. These contributions are invested until the benefits are paid to plan participants. The net benefit cost (credit) of this plan is recorded on our accompanying Consolidated Statements of Income and Comprehensive Income and is a function of many factors including expected returns on plan assets and amortization of certain deferred gains and losses. Refer to Note 5 for further information.
In accounting for our postretirement benefit plan, we record an asset or liability based on the difference between the fair value of the plan's assets and the plan's benefit obligation. Any deferred amounts related to unrecognized gains and losses or changes in actuarial assumptions are recorded on our accompanying Consolidated Balance Sheets in "Accumulated other comprehensive income" until those gains or losses are recognized on our accompanying Consolidated Statements of Income and Comprehensive Income. Other than service cost, all other components of net benefit (cost) credit are included within "Other, net" in our accompanying Consolidated Statements of Income and Comprehensive Income.
Income Taxes
We are a single member limited liability company and are not subject to federal or state income taxes. Accordingly, no provision for federal and state income taxes has been recorded in our financial statements. The tax effects of our activities accrue to our Member who reports the revenue and expenses on its income tax returns. However, we are subject to Texas margin tax (a revenue based calculation), which is presented as "Income Tax Expense" on our accompanying Consolidated Statements of Income and Comprehensive Income.
Regulatory Assets and Liabilities
Our interstate natural gas pipeline and storage operations are subject to the jurisdiction of the FERC and are accounted for in accordance with Topic 980, Regulated Operations. Under these standards, we record regulatory assets and liabilities that would not be recorded for non-regulated entities. Regulatory assets and liabilities represent probable future revenues or expenses associated with certain charges and credits that are expected to be recovered from or returned to customers through the ratemaking process. Refer to Note 8 for further information.
Our property, plant, and equipment, net consisted of the following:
Transmission and storage facilities
2.0 - 10.0
$ 8,573
$ 7,904
General plant
3.1 - 24.0
143
147
Intangible plant
3.1 - 14.0
80
74
Other
68
45
Accumulated depreciation and amortization(a)
(2,238)
(2,024)
6,626
6,146
Land
25
22
Construction work in progress
345
440
Property, plant, and equipment, net
$ 6,996
$ 6,608
(a) The composite weighted average depreciation rates for the years ended December 31, 2025 and 2024 were approximately 3.0% and 3.3%, respectively.
The following table provides detail on the principal amount of our outstanding debt balances:
7.0% Debentures due March 2027(a)
$ 300
$ 300
7.0% Debentures due October 2028
400
400
2.9% Senior notes due March 2030
1,000
1,000
8.375% Notes due June 2032
240
240
7.625% Debentures due April 2037
300
300
Total long-term debt
$ 2,240
$ 2,240
(a) We intend to satisfy this debt obligation through issuance of bank or bond debt, issuance of notes to our Member, capital contributions from our Member, or a combination of these options.
KMI and substantially all of its wholly owned domestic subsidiaries, including us, are a party to a cross guarantee agreement whereby each party to the agreement unconditionally guarantees, jointly and severally, the payment of specified indebtedness of each other party to the agreement.
Debt Fair Value Adjustments
As of December 31, 2025, and 2024, the "Debt fair value adjustments" on our accompanying Consolidated Balance Sheets include unamortized debt issue costs of approximately $3 million and $4 million, respectively.
Debt Covenants
Under our various financing documents, we are subject to certain restrictions and covenants. The most restrictive of these include limitations on the incurrence of liens and limitations on sale-leaseback transactions. For the years ended December 31, 2025 and 2024, we were in compliance with our debt-related covenants.
KMI maintains a pension plan and a retirement savings plan covering substantially all of its U.S. employees, including certain of our former employees. KMI is responsible for benefits accrued under its plans and allocates certain costs based on a benefit allocation rate applied on payroll charged to its affiliates.
We also provide postretirement benefits, including medical benefits for a closed group of retirees. Our postretirement benefit plan costs were prefunded and were recoverable under prior rate case settlements. There is no cost recovery or related funding that is required as part of our current FERC-approved rates; however, we can seek to recover any funding shortfall that may be required in the future. There were no contributions made in 2025 and 2024, and we do not expect to make any contributions to our postretirement benefit plan in 2026.
As of December 31, 2025 and 2024 our postretirement benefit plan net assets were $32 million and $31 million, respectively, included in "Deferred charges and other assets" on our accompanying Consolidated Balance Sheets, which is net of our postretirement benefit obligation of $6 million as of each balance sheet date. Our postretirement benefit plan net benefit credit for each of the years ended December 31, 2025 and 2024 was approximately $1 million.
"Accumulated other comprehensive income" as of December 31, 2025 and 2024 includes $6 million and $3 million, respectively, of unrecognized net actuarial gains.
Our plan assets' fair values are based on the net asset value per share, or its equivalent (NAV), as a practical expedient to measure fair value, as reported by the issuers. The fair values are determined based on the fair value of the underlying securities as of the valuation date and include common/collective trust funds. Plan assets measured at NAV are not categorized within the fair value hierarchy.
Affiliate Balances and Activities
We participate in KMI's cash management program, which matches the short-term cash surpluses and needs of participating affiliates, thus minimizing total borrowings from outside sources. KMI uses the cash management program to settle intercompany transactions between participating affiliates. As of both December 31, 2025 and 2024, we had no balance with KMI under the cash management program. The interest rate on this note is variable and was 3.9% and 4.7% as of December 31, 2025 and 2024, respectively.
The following table summarizes our other balance sheet affiliate balances:
Accounts receivable
$ 2
$ 1
Natural gas imbalance receivable
1
-
Other current assets
-
1
Accounts payable
7
2
Natural gas imbalance payable
1
1
Other current liabilities
2
-
We do not have employees and are managed and operated by KMI, who provides services to us. Under KMI policies, we reimburse KMI at cost for direct and indirect costs incurred on our behalf and allocated general and administrative costs. These costs are reflected, as appropriate, in the "Operations and maintenance," "General and administrative and other costs," and "Capitalized costs" lines in the table below.
The following table shows revenues and costs from our affiliates:
Revenues
$ 6
$ 5
Operations and maintenance(a)
148
118
General and administrative and other costs
84
79
Capitalized costs
44
49
(a) Includes costs associated with transportation and storage agreements. Refer to Note 9 "Litigation, Environmental and Commitments-
Commitments-Purchase Obligations" for further information.
Subsequent Events
Subsequent to December 31, 2025 and through the issuance of this report, we made a distribution to and received a contribution from our Member of approximately $283 million and $141 million, respectively.
Disaggregation of Revenues
The following table presents our revenues disaggregated by revenue source and type of revenue for each revenue source:
Revenues from contracts with customers
Services
Firm services
$ 1,805
$ 1,657
Fee-based services
256
204
Total services
2,061
1,861
Natural gas sales
12
3
Total revenues from contracts with customers
2,073
1,864
Other revenues
3
4
Total revenues
$ 2,076
$ 1,868
Regulatory Assets and Liabilities
As of December 31, 2025, the regulatory assets are subject to recovery in our rates, over a period of approximately one year to 26 years. Below are the details of our regulatory assets and liabilities:
Current regulatory assets
Difference between gas retained and gas consumed in operations
$ 3
$ -
Unamortized loss on sale of assets
10
10
Other
17
6
Total current regulatory assets
30
16
Non-current regulatory assets
Taxes on capitalized funds used during construction
16
17
Unamortized loss on reacquired debt
3
4
Unamortized loss on sale of assets
67
77
Gas imbalance cash out
56
55
Total non-current regulatory assets
142
153
Total regulatory assets(a)
$ 172
$ 169
Current regulatory liabilities
Difference between gas retained and gas consumed in operations
$ -
$ 7
Other
3
7
Total current regulatory liabilities(b)
3
14
Non-current regulatory liabilities
Income tax-related
44
46
Environmental
21
19
Postretirement benefits
19
22
Total non-current regulatory liabilities(c)
84
87
Total regulatory liabilities
$ 87
$ 101
Includes approximately $91 million and $81 million as of December 31, 2025 and 2024, respectively, of regulatory assets which are recoverable without earning a return.
Included in "Other current liabilities" on our accompanying Consolidated Balance Sheets.
Included in "Other long-term liabilities and deferred credits" on our accompanying Consolidated Balance Sheets.
Our significant regulatory assets and liabilities include:
Difference between gas retained and gas consumed in operations
Amounts reflect the value of the difference between the gas retained and consumed in our operations. Pursuant to our tariff, these amounts are expected to be recovered from or returned to our customers in subsequent periods.
Unamortized loss on sale of assets
Amounts represent deferred losses on the sale of certain assets and are allowed for recovery in our rates.
Taxes on capitalized funds used during construction
Amounts represent the deferred income taxes on AFUDC equity funds recognized during the time when we were a taxable entity. These amounts are recoverable in our tariff rates over the depreciable lives of the assets to which they apply.
Unamortized loss on reacquired debt
Amounts represent the deferred and unamortized portion of loss on reacquired debt which is recoverable in our tariff rates. Amounts are amortized over the original life of the debt issue, or in the case of refinanced debt, over the life of the new debt issue.
Gas imbalance cash out
Amounts reflect the revenue or cost from cash out activity net of the revenue or cost from operational sales or purchases of gas to offset the net cash out activity.
Income tax-related
Amounts represent the anticipated return to ratepayers of deferred income taxes as a result of the Tax Cuts and Jobs Act of 2017, which lowered the U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018. These amounts are amortized over the remaining depreciable lives of the assets to which they apply.
Environmental
Includes amounts collected in excess of certain environmental remediation costs incurred to date, through a surcharge to our customers under a settlement approved by the FERC in November of 1995.
Postretirement benefits
Amounts represent the utilization of excess plan assets to fund KMI's retiree medical costs as permitted by our rate settlement.
Regulatory Matters
Rate Proceedings
Pursuant to our FERC approved settlement in Docket No. RP19-351 (2019 Settlement), we filed a cost and revenue study on November 1, 2023. On January 8, 2024, we reached a settlement in principle with our customers on rates and other matters related to our 2019 Settlement and the subsequent cost and revenue study. On March 20, 2024, we filed an uncontested settlement with the FERC in Docket No. RP24-333 (2024 Settlement), which was approved by the FERC on May 30, 2024 and went into effect on July 1, 2024.
The 2024 Settlement provides for a phased 8% cumulative reduction from our then effective rates. Pursuant to the settlement in principle, the initially agreed upon 2% rate reduction was implemented on an interim basis effective January 1, 2024 and approved by the FERC on February 21, 2024. An additional 2% rate reduction was effective on January 1, 2025, and the final 4% rate reduction was effective on January 1, 2026. The 2024 Settlement also establishes a moratorium on Natural Gas Act (NGA) section 4 filings and NGA section 5 complaints seeking to change the settlement rates through December 31, 2026, and requires us to submit a cost and revenue study on or before November 2, 2026.
Certificate Proceedings
Evangeline Pass Expansion Project
On February 7, 2020, we filed an application with the FERC requesting authority to construct the Evangeline Pass Expansion Project. The application includes the replacement of certain facilities located in Plaquemines Parish, Louisiana and acquisition of leased capacity from SNG. Installation of these facilities and the acquisition of the leased capacity enable us to provide incremental firm transportation services to Venture Global Plaquemines LNG, LLC's facility. The FERC order approving the project was issued on March 25, 2022. In February 2025, we placed certain project facilities in service to provide the project shipper with 400,000 dekatherms per day (Dth/d) of interim capacity. The remaining project facilities were placed into service on July 1, 2025. The total cost of our project was approximately $335 million.
Cumberland Project
On January 18, 2024, the FERC approved our application requesting authority to construct the Cumberland Project, which is designed to create additional firm transportation capacity from our mainline to a new combined-cycle combustion turbine natural gas plant constructed and operated by Tennessee Valley Authority to replace an existing coal-fired power plant at the Cumberland Fossil Plant Reservation Site. The filed cost of the project is approximately $185 million with an original anticipated in-service date of September 2025. On October 11, 2024, in response to motions filed by Sierra Club and Appalachian Voices, the U.S. Court of Appeals for the 6th Circuit (6th Circuit Court of Appeals) issued a stay of the Tennessee Department of Environment & Conservation's Clean Water Act Section 401 Water Quality Certification (Section 401 Water Quality Certification) issued for the project and the U.S. Army Corps of Engineers' Clean Water Act Section 404 Individual Permit (Section 404 Individual Permit) issued for the project. Following the December 10, 2024 oral argument, the 6th Circuit Court of Appeals issued two decisions on April 4, 2025 that upheld the Section 401 Water Quality Certification and the Section 404 Individual Permit, respectively, and issued an order on April 15, 2025 lifting the stay. We commenced construction activities for the Cumberland Project in April 2025, and anticipate an in-service date of April 2026. Oral argument before the
U.S. Court of Appeals for the DC Circuit (DC Circuit) regarding a FERC certificate order appeal filed by Sierra Club and Appalachian Voices was held on March 4, 2025. On September 30, 2025, the DC Circuit denied the appeal of the Cumberland Project FERC Certificate by Sierra Club and Appalachian Voices.
Mississippi Crossing (MSX) Project
On November 8, 2024, we submitted a request to the FERC to use the pre-filing process for the MSX Project, which includes the construction and installation of approximately 206 miles of new pipeline and lateral facilities, new compressor stations, and new meter stations in Mississippi and Alabama. This proposed $1.7 billion project will provide up to 2.1 Bcf per day of additional natural gas transportation capacity to meet growing energy needs in the southeast U.S. The FERC approved the request on December 6, 2024. The certificate application was filed on June 30, 2025, and we requested issuance of a certificate order authorizing the project by July 1, 2026. The FERC issued a notice in December 2025, with an anticipated date for issuing the certificate order no later than July 31, 2026. With the timely receipt of all permits and approvals, the project is expected to be in service as early as the second quarter of 2028.
On November 5, 2025, we were informed that the Federal Permitting Improvement Steering Committee, established by Title 41 of the Fixing America's Surface Transportation Act (FAST-41), has added the MSX Project to the FAST-41 program, which aims to streamline federal reviews for large infrastructure projects. The FERC will lead the federal permitting for the MSX Project under FAST-41. A permitting timetable for the MSX Project was posted to the FAST-41 dashboard in January 2026 with the final Environmental Impact Statement scheduled to be issued June 26, 2026.
Legal Proceedings
We are party to various legal, regulatory and other matters arising from the day-to-day operations of our businesses or certain predecessor operations that may result in claims against the Company. Although no assurance can be given, we believe, based on our experiences to date and taking into account accrued liabilities and insurance, that the ultimate resolution of such items will not have a material adverse impact to our financial position, cash flows, or operating results. We believe we have numerous and substantial defenses to the matters to which we are a party and intend to vigorously defend the Company. When we determine a loss is probable of occurring and is reasonably estimable, we accrue an undiscounted liability for such contingencies based on our best estimate using information available at that time. If the estimated loss is a range of potential outcomes and there is no better estimate within the range, we accrue the amount at the low end of the range. We disclose contingencies where an adverse outcome may be material or, in the judgment of management, we conclude the matter should otherwise be disclosed.
Environmental Matters
We are subject to environmental cleanup and enforcement actions from time to time. In particular, the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) generally imposes joint and several liability for cleanup and enforcement costs on current and predecessor owners and operators of a site, among others, without regard to fault or the legality of the original conduct, subject to the right of a liable party to establish a "reasonable basis" for apportionment of costs. Our operations are also subject to federal, state, and local laws and regulations relating to protection of the environment. Although we believe our operations are in substantial compliance with applicable environmental laws and regulations, risks of
additional costs and liabilities are inherent in our operations, and there can be no assurance that we will not incur significant costs and liabilities. Moreover, it is possible that other developments could result in substantial costs and liabilities to us, such as increasingly stringent environmental laws, regulations, and enforcement policies under the terms of authority of those laws, and claims for damages to property or persons resulting from our operations. Although it is not possible to predict the ultimate outcomes, we believe that the resolution of the environmental matters set forth in this note, and other matters to which we are a party, will not have a material adverse effect on our financial position, cash flows, or operating results.
Louisiana Governmental Coastal Zone Erosion Litigation
On November 8, 2013, the Parish of Plaquemines, Louisiana and others filed petitions in the state district court for Plaquemines Parish against us and 17 other energy companies, alleging that the defendants' operations in Plaquemines Parish violated the State and Local Coastal Resources Management Act of 1978, as amended and Louisiana law and caused substantial damage to the coastal waters and nearby lands. Plaintiffs seek, among other relief, unspecified money damages, attorney fees, interest, and restoration costs. In May 2018, the case was removed to the U.S. District Court for the Eastern District of Louisiana and has been stayed pending the resolution of federal question jurisdictional issues in separate consolidated cases to which we are not a party. At this time, we are not able to reasonably estimate the extent of our potential liability, if any. We intend to vigorously defend this case.
Superfund Matters
Included in our recorded environmental liabilities are projects where we have received notice that we have been designated or could be designated as a Potentially Responsible Party (PRP) under CERCLA, commonly known as Superfund, or state equivalents for three active sites. Liability under the federal CERCLA statute may be joint and several, meaning that we could be required to pay in excess of our pro rata share of remediation costs. We consider the financial strength of other PRPs in estimating our liabilities.
Commitments
Capital Commitments
As of December 31, 2025, we had capital commitments of approximately $953 million. We have other planned capital and investment projects that are discretionary in nature, with no substantial contractual capital commitments made in advance of the actual expenditures.
Purchase Obligations
We have entered into unconditional purchase obligations for transportation, storage, capacity lease, and other services with third parties and our affiliates, including SNG, Kinder Morgan Texas Pipeline LLC, Bear Creek, and Arlington Storage Company, LLC. Future annual obligations as of December 31, 2025 are as follows:
Year Affiliate(a) Total
2026
$ 66
$ 145
2027
56
143
2028
54
122
2029
54
116
2030
53
113
Thereafter
514
617
Total
$ 797
$ 1,256
(a) Includes a 20-year capacity lease agreement with SNG. Refer to Note 9 "Accounting for Regulatory Activities-Regulatory Matters-Certificate Proceedings-Evangeline Pass Expansion Project" for further information.
For the years ended December 31, 2025 and 2024, total expenses related to these commitments were $135 million and
$107 million, respectively, of which $63 million and $37 million, respectively, were with our affiliates. These expenses are reflected in "Operations and maintenance" on our accompanying Consolidated Statements of Income and Comprehensive Income.
Accounting Standards Update (ASU) No. 2025-06
On September 18, 2025, the FASB issued ASU No. 2025-06, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software." This ASU modernizes the accounting guidance for the costs to develop software for internal use by removing outdated stage-based cost capitalization rules and replacing them with a probability-based cost-capitalization framework that aligns better with current software development methods. This ASU will be effective for annual periods beginning after December 15, 2027, for interim reporting periods beginning within those annual periods, and early adoption is permitted. Management is currently evaluating this ASU to determine its impact on the Company's financial statements.
Disclaimer
Kinder Morgan Inc. published this content on April 16, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 16, 2026 at 21:13 UTC.