v2.4.0.6
Risk Management (Tables)
 3 Months Ended
Mar. 31, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income [Table Text Block]
Changes in the components of our “Accumulated other comprehensive income” for the three months ended March 31, 2013 are summarized as follows (in millions):


 
Net unrealized
gains/(losses)
on cash flow
hedge derivatives
 
Foreign
currency
translation
adjustments
 
Pension and
other
postretirement
liability adjs.
 
Total
Accumulated other
comprehensive
income/(loss)
Balance as of December 31, 2012
$
7

 
$
51

 
$
(177
)
 
$
(119
)
Other comprehensive income before reclassifications
(16
)
 
(17
)
 
(1
)
 
(34
)
Amounts reclassified from accumulated other comprehensive income
(4
)
 
—

 
—

 
(4
)
Net current-period other comprehensive income
(20
)
 
(17
)
 
(1
)
 
(38
)
Balance as of March 31, 2013
$
(13
)
 
$
34

 
$
(178
)
 
$
(157
)
Schedule of Derivative Instruments
As of March 31, 2013, KMI and KMP had entered into the following outstanding commodity forward contracts to hedge their forecast energy commodity purchases and sales:
 
 
Net open position long/(short)
Derivatives designated as hedging contracts
 
 
 
Crude oil fixed price
(21.4
)
 
million barrels
Natural gas fixed price
(33.9
)
 
billion cubic feet
Natural gas basis
(34.4
)
 
billion cubic feet
Derivatives not designated as hedging contracts
 

 
 
Crude oil fixed price
(0.1
)
 
million barrels
Crude oil basis
(3.6
)
 
million barrels
Natural gas fixed price
(2.0
)
 
billion cubic feet
Natural gas basis
13.1

 
billion cubic feet
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value
The following table summarizes the fair values of our derivative contracts included on our accompanying consolidated balance sheets as of March 31, 2013 and December 31, 2012 (in millions):
Fair Value of Derivative Contracts
 
 
 
 
Asset derivatives
 
Liability derivatives
 
 
 
 
March 31,
 
December 31,
 
March 31,
 
December 31,
 
 
 
 
2013
 
2012
 
2013
 
2012
 
 
Balance sheet location
 
Fair value
 
Fair Value
 
Fair value
 
Fair Value
Derivatives designated as hedging contracts
 
 
 
 
 
 
 
 
 
 
Natural gas and crude derivative contracts
 
Current-Fair value of derivative contracts
 
$
19

 
$
42

 
$
(45
)
 
$
(18
)
 
 
Non-current-Fair value of derivative contracts
 
37

 
40

 
(8
)
 
(11
)
Subtotal
 
 
 
56

 
82

 
(53
)
 
(29
)
Interest rate swap agreements - Fair value hedges
 
Current-Fair value of derivative contracts
 
7

 
9

 
—

 
—

 
 
Non-current-Fair value of derivative contracts
 
572

 
656

 
(3
)
 
(1
)
Subtotal
 
 
 
579

 
665

 
(3
)
 
(1
)
Total
 
 
 
635

 
747

 
(56
)
 
(30
)
Derivatives not designated as hedging contracts
 
 
 
 

 
 
 
 

 
 
Natural gas and crude derivative contracts
 
Current-Fair value of derivative contracts
 
7

 
4

 
(4
)
 
(3
)
 
 
Non-current-Fair value of derivative contracts
 
—

 
—

 
—

 
(1
)
Subtotal
 
 
 
7

 
4

 
(4
)
 
(4
)
Power derivative contracts
 
Current-Fair value of derivative contracts
 
6

 
8

 
(55
)
 
(59
)
 
 
Non-current-Fair value of derivative contracts
 
9

 
13

 
(105
)
 
(120
)
Subtotal
 
 
 
15

 
21

 
(160
)
 
(179
)
Total
 
 
 
22

 
25

 
(164
)
 
(183
)
Total derivatives(a)
 
 
 
$
657

 
$
772

 
$
(220
)
 
$
(213
)
_______
(a)
As of March 31, 2013 and December 31, 2012, we presented the fair value of our derivative contracts on a gross basis on our accompanying consolidated balance sheets.  If we had elected to net derivative contracts subject to master netting agreements as of March 31, 2013 and December 31, 2012, the impact would have reduced our derivative assets and liabilities by $33 million and $38 million, respectively.  As of March 31, 2013 and December 31, 2012, KMP had cash margin deposits associated with its derivative contracts posted with counterparties of $21 million and $5 million, respectively, that would have additionally reduced our derivative liabilities.
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance
The following three tables summarize the impact of our derivative contracts on our accompanying consolidated statements of income for each of the three months ended March 31, 2013 and 2012 (in millions):
 
Derivatives in fair value hedging relationships
 
Location of gain/(loss) recognized in income on derivatives
 
Amount of gain/(loss) recognized in income
 on derivatives and related hedged item(a)
 
 
 
 
Three Months Ended March 31,
 
 
 
 
2013
 
2012
Interest rate swap agreements
 
Interest expense
 
$
(88
)
 
$
(115
)
Total
 
 
 
$
(88
)
 
$
(115
)
 
 
 
 
 
 
 
Fixed rate debt
 
Interest expense
 
$
88

 
$
115

Total
 
 
 
$
88

 
$
115

_______
(a)
Amounts reflect the change in the fair value of interest rate swap agreements and the change in the fair value of the associated fixed rate debt which exactly offset each other as a result of no hedge ineffectiveness.
Derivatives
 in cash flow 
hedging
relationships
 
Amount of gain/(loss)
recognized in OCI 
on derivative(effective portion)(a)
 
Location of
gain/(loss)
reclassified from
Accumulated OCI
into income
(effective
 portion)
 
Amount of gain/(loss)
reclassified from
Accumulated OCI
into income
(effective portion)(b)
 
Location of
gain/(loss)
recognized in
income on
derivative
(ineffective
 portion
and amount
excluded from
effectiveness
testing)
 
Amount of gain/(loss)
recognized in income
on derivative
(ineffective portion
and amount
excluded from
effectiveness testing)
 
 
Three Months Ended
March 31,
 
 
 
Three Months Ended
March 31,
 
 
 
Three Months Ended
March 31,
 
 
2013
 
2012
 
 
 
2013
 
2012
 
 
 
2013
 
2012
Energy commodity derivative  contracts
 
$
(32
)
 
$
(86
)
 
Revenues-Natural gas sales
 
$
—

 
$
—

 
Revenues-Natural gas sales
 
$
—

 
$
—

 
 
 
 
 
 
Revenues-Product sales and other
 
5

 
(21
)
 
Revenues-Product sales and other
 
(3
)
 
(3
)
 
 
 
 
 
 
Gas purchases and other costs of sales
 
—

 
(2
)
 
Gas purchases and other costs of sales
 
—

 
—

Interest rate swap agreements
 
1

 
—

 
Interest expense
 
1

 
—

 
Interest Expense
 
—

 
—

Total
 
$
(31
)
 
$
(86
)
 
Total
 
$
6

 
$
(23
)
 
Total
 
$
(3
)
 
$
(3
)
_______
(a)
We expect to reclassify an approximate $12 million loss associated with derivatives and included in our accumulated other comprehensive loss and noncontrolling interest balances as of March 31, 2013 into earnings during the next twelve months (when the associated forecasted transactions are also expected to occur), however, actual amounts reclassified into earnings could vary materially as a result of changes in market prices. 
(b)
No material amounts were reclassified into earnings as a result of the discontinuance of cash flow hedges because it was probable that the original forecast transactions would no longer occur by the end of the originally specified time period or within an additional two-month period of time thereafter, but rather, the amounts reclassified were the result of the hedged forecast transactions actually affecting earnings (i.e., when the forecast sales and purchases actually occurred). 

Derivatives not designated as hedging contracts
 
Location of gain/(loss) recognized in income on derivatives
 
Amount of gain/(loss) recognized in income
 on derivatives
 
 
 
 
Three Months Ended
March 31,
 
 
 
 
2013
 
2012
Natural gas derivative contracts
 
Revenues-Natural gas sales
 
$
1

 
$
—

Crude oil derivative contracts
 
Revenues-Product sales and other
 
4

 
—

Power derivative contracts
 
Revenues-Product sales and other
 
(2
)
 
—

Total
 
 
 
$
3

 
$
—
Derivative Credit Risk
The maximum potential exposure to credit losses on derivative contracts as of March 31, 2013 was as follows (in millions): 
 
Asset
position
Interest rate swap agreements
$
579

Energy commodity derivative contracts
78

Gross exposure
657

Netting agreement impact
(33
)
Cash collateral held
—

Net exposure
$
624