Page 47 - DCP AR2011 Dev

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We operate in a highly competitive business environment.
We compete with similar enterprises in our respective areas of operation. Some of our competitors are
large oil, natural gas and petrochemical companies that have greater financial resources and access to supplies
of natural gas, propane and NGLs than we do. Some of these competitors may expand or construct gathering,
processing and transportation systems that would create additional competition for the services we provide to
our customers. Likewise, our customers who produce NGLs may develop their own systems to transport NGLs.
Additionally, our wholesale propane distribution customers may develop their own sources of propane supply.
Our ability to renew or replace existing contracts with our customers at rates sufficient to maintain current
revenues and cash flows could be adversely affected by the activities of our competitors and our customers.
Our assets and operations can be affected by weather and other weather related conditions.
Our assets and operations can be adversely affected by hurricanes, floods, tornadoes, wind, lightning, cold
weather and other natural phenomena, which could impact our results of operations and make it more difficult
for us to realize historic rates of return. Although we carry insurance on the vast majority of our assets,
insurance may be inadequate to cover our loss and in some instances, we have been unable to obtain insurance
on commercially reasonable terms, if at all. If we incur a significant disruption in our operations or a significant
liability for which we were not fully insured, our financial condition, results of operations and ability to make
distributions to our unitholders could be materially adversely affected.
Competition from alternative energy sources, conservation efforts and energy efficiency and technological
advances may reduce the demand for propane.
Competition from alternative energy sources, including natural gas and electricity, has been increasing as a
result of reduced regulation of many utilities. In addition, propane competes with heating oil primarily in
residential applications. Propane is generally not competitive with natural gas in areas where natural gas
pipelines already exist because natural gas is a less expensive source of energy than propane. The gradual
expansion of natural gas distribution systems and availability of natural gas in the northeast, which has
historically depended upon propane, could reduce the demand for propane, which could adversely affect the
volumes of propane that we distribute. In addition, stricter conservation measures in the future or technological
advances in heating, energy generation or other devices could reduce the demand for propane.
A change in the jurisdictional characterization of some of our assets by federal, state or local regulatory
agencies or a change in policy by those agencies may result in increased regulation of our assets.
The majority of our natural gas gathering and intrastate transportation operations are exempt from FERC
regulation under the NGA but FERC regulation still affects these businesses and the markets for products
derived from these businesses. FERC’s policies and practices across the range of its oil and natural gas
regulatory activities, including, for example, its policies on open access transportation, ratemaking, capacity
release and market center promotion, indirectly affect intrastate markets. In recent years, FERC has pursued
pro-competitive policies in its regulation of interstate oil and natural gas pipelines. However, we cannot assure
that FERC will continue this approach as it considers matters such as pipeline rates and rules and policies that
may affect rights of access to oil and natural gas transportation capacity. In addition, the distinction between
FERC-regulated transmission services and federally unregulated gathering services has been the subject of
regular litigation, so the classification and regulation of some of our gathering facilities and intrastate
transportation pipelines may be subject to change based on any reassessment by us of the jurisdictional status of
our facilities or on future determinations by FERC and the courts.
In addition, the rates, terms and conditions of some of the transportation services we provide on our Pelico
pipeline system and the EasTrans Limited Partnership or EasTrans pipeline system owned by East Texas, are
subject to FERC regulation under Section 311 of the NGPA. Under Section 311, rates charged for
transportation must be fair and equitable, and amounts collected in excess of fair and equitable rates are subject
to refund with interest. The Pelico system is currently charging rates for its Section 311 transportation services
that were deemed fair and equitable under a rate settlement approved by FERC. The EasTrans system is
currently charging rates for its Section 311 transportation services that were deemed fair and equitable under an
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