Spectra Energy 10-K 25 Feb 10 2009 FY Annual report Financial data

Statement Of Income Alternative

Statement Of Income Alternative (USD $)
In Millions, except Per Share data	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
Operating Revenues
Transportation, storage and processing of natural gas	$2,565	$2,343	$2,200
Distribution of natural gas	1,451	1,731	1,664
Sales of natural gas liquids	389	772	601
Other	147	228	239
Total operating revenues	4,552	5,074	4,704
Operating Expenses
Natural gas and petroleum products purchased	1,098	1,586	1,416
Operating, maintenance and other	1,144	1,235	1,148
Depreciation and amortization	584	569	518
Property and other taxes	262	246	209
Total operating expenses	3,088	3,636	3,291
Gains on Sales of Other Assets and Other, net	11	42	13
Operating Income	1,475	1,480	1,426
Other Income and Expenses
Equity in earnings of unconsolidated affiliates	369	778	596
Other income and expenses, net	37	66	53
Total other income and expenses	406	844	649
Interest Expense	610	636	633
Earnings From Continuing Operations Before Income Taxes	1,271	1,688	1,442
Income Tax Expense From Continuing Operations	353	496	440
Income From Continuing Operations	918	1,192	1,002
Income From Discontinued Operations, net of tax	5	2	25
Net Income	923	1,194	1,027
Net Income-Noncontrolling Interests	75	65	70
Net Income-Controlling Interests	$848	$1,129	$957
Weighted-average shares outstanding
Basic	642	622	632
Diluted	643	624	635
Earnings per share from continuing operations
Basic	1.31	1.82	1.48
Diluted	1.31	1.81	1.48
Earnings per share
Basic	1.32	1.82	1.51
Diluted	1.32	1.81	1.51
Dividends per share	$1	0.96	0.88

Statement Of Financial Position

Statement Of Financial Position Classified (USD $)
In Millions	Dec. 31, 2009	Dec. 31, 2008
Current Assets
Cash and cash equivalents	$196	$214
Receivables (net of allowance for doubtful accounts of $14 and $12 at December 31, 2009 and 2008, respectively)	778	795
Inventory	321	279
Other	134	162
Total current assets	1,429	1,450
Investments and Other Assets
Investments in and loans to unconsolidated affiliates	2,001	2,152
Goodwill	3,948	3,381
Other	407	417
Total investments and other assets	6,356	5,950
Property, Plant and Equipment
Cost	19,960	17,569
Less accumulated depreciation and amortization	4,613	3,930
Net property, plant and equipment	15,347	13,639
Regulatory Assets and Deferred Debits	947	885
Total Assets	24,079	21,924
Current Liabilities
Accounts payable	333	285
Short-term borrowings and commercial paper	162	936
Taxes accrued	139	105
Interest accrued	167	158
Current maturities of long-term debt	809	821
Other	885	739
Total current liabilities	2,495	3,044
Long-term Debt	8,947	8,290
Deferred Credits and Other Liabilities
Deferred income taxes	3,113	2,789
Regulatory and other	1,634	1,566
Total deferred credits and other liabilities	4,747	4,355
Commitments and Contingencies
Preferred Stock of Subsidiaries	225	225
Equity
Preferred stock, $0.001 par, 22 million shares authorized, no shares outstanding	0	0
Common stock, $0.001 par, 1 billion shares authorized, 647 million and 611 million shares outstanding at December 31, 2009 and 2008, respectively	1	1
Additional paid-in capital	4,700	4,104
Retained earnings	1,096	899
Accumulated other comprehensive income	1,328	536
Total controlling interests	7,125	5,540
Noncontrolling interests	540	470
Total equity	7,665	6,010
Total Liabilities and Equity	$24,079	$21,924

1_Statement Of Financial Positi

Statement Of Financial Position Classified (Parenthetical) (USD $)
In Millions, except Share data	Dec. 31, 2009	Dec. 31, 2008
Receivables, allowance for doubtful accounts	$14	$12
Preferred stock, par	0.001	0.001
Preferred stock, shares authorized	22,000,000	22,000,000
Preferred stock, shares outstanding	0	0
Common stock, par	0.001	0.001
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares outstanding	647,000,000	611,000,000

Statement Of Cash Flows Indirec

Statement Of Cash Flows Indirect (USD $)
In Millions	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$923	$1,194	$1,027
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	598	581	534
Deferred income tax expense	177	161	110
Equity in earnings of unconsolidated affiliates	(369)	(778)	(596)
Distributions received from unconsolidated affiliates	195	777	569
Decrease (increase) in
Receivables	143	(36)	59
Inventory	7	(76)	147
Other current assets	69	(36)	14
Increase (decrease) in
Accounts payable	35	24	(93)
Taxes accrued	78	8	(61)
Other current liabilities	33	(52)	(198)
Other, assets	(62)	81	(1)
Other, liabilities	(67)	(43)	(44)
Net cash provided by operating activities	1,760	1,805	1,467
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(980)	(1,502)	(1,202)
Investments in and loans to unconsolidated affiliates	(61)	(528)	(285)
Acquisitions, net of cash acquired	(295)	(274)	(14)
Purchases of available-for-sale securities	0	(1,132)	(1,550)
Proceeds from sales and maturities of available-for-sale securities	32	1,256	1,405
Net proceeds from the sale of other assets	0	105	15
Distributions received from unconsolidated affiliates	164	218	87
Receipt from affiliate-repayment of loan	186	0	0
Other	(46)	(31)	0
Net cash used in investing activities	(1,000)	(1,888)	(1,544)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	4,127	3,557	783
Payments for the redemption of long-term debt	(4,023)	(2,400)	(981)
Net increase (decrease) in short-term borrowings and commercial paper	(774)	249	366
Distributions to noncontrolling interests	(174)	(70)	(57)
Contributions from noncontrolling interests	2	115	9
Proceeds from the issuance of Spectra Energy common stock	448	0	0
Proceeds from the issuance of Spectra Energy Partners, LP common units	208	0	230
Repurchases of Spectra Energy common stock	0	(600)	0
Dividends paid on common stock	(631)	(598)	(558)
Other	14	(39)	17
Net cash provided by (used in) financing activities	(803)	214	(191)
Effect of exchange rate changes on cash	25	(11)	63
Net increase (decrease) in cash and cash equivalents	(18)	120	(205)
Cash and cash equivalents at beginning of period	214	94	299
Cash and cash equivalents at end of period	196	214	94
Supplemental Disclosures
Cash paid for interest, net of amount capitalized	587	611	627
Cash paid for income taxes	100	322	393
Property, plant and equipment noncash accruals	$24	$44	$109

Statement Of Shareholders Equit

Statement Of Shareholders Equity And Other Comprehensive Income (USD $)
In Millions	Common Stock	Additional Paid-in Capital	Retained Earnings / Member's Equity	Accumulated Other Comprehensive Income Foreign Currency Translation Adjustments	Accumulated Other Comprehensive Income Other	Noncontrolling Interests	Total
Beginning Balance at Dec. 31, 2006	$0	$0	$4,598	$1,156	($115)	$340	$5,979
Net income			957			70	1,027
Other comprehensive income (loss)
Foreign currency translation adjustments				877		38	915
Reclassification of cash flow hedges into earnings					(2)		(2)
Pension and benefits impact					14		14
Conversion to Spectra Energy Corp	1	4,597	(4,598)				0
Recognition of uncertain income taxes			(26)				(26)
Transfer of net assets and liabilities from Duke Energy Corporation		12			(100)		(88)
Dividends on common stock			(558)				(558)
Spectra Energy Partners, LP common unit issuance						169	169
Distributions to noncontrolling interests						(57)	(57)
Contributions from noncontrolling interests						9	9
Effect of changing measurement date of pension benefit obligation			(5)				(5)
Stock-based compensation		49					49
Other, net						12	12
Ending Balance at Dec. 31, 2007	1	4,658	368	2,033	(203)	581	7,438
Net income			1,129			65	1,194
Other comprehensive income (loss)
Foreign currency translation adjustments				(1,152)		(2)	(1,154)
Unrealized mark-to-market net loss on hedges					(11)		(11)
Reclassification of cash flow hedges into earnings					2		2
Pension and benefits impact					(133)		(133)
Spectra Energy common stock repurchases		(600)					(600)
Dividends on common stock			(598)				(598)
Distributions to noncontrolling interests						(73)	(73)
Contributions from noncontrolling interests						115	115
Stock-based compensation		38					38
Purchase of Spectra Energy Income Fund units						(208)	(208)
Other, net		8				(8)	0
Ending Balance at Dec. 31, 2008	1	4,104	899	881	(345)	470	6,010
Net income			848			75	923
Other comprehensive income (loss)
Foreign currency translation adjustments				805		11	816
Unrealized mark-to-market net loss on hedges					(9)		(9)
Reclassification of cash flow hedges into earnings					1		1
Pension and benefits impact					(5)		(5)
Dividends on common stock			(651)				(651)
Spectra Energy Partners, LP common unit issuance		25				168	193
Distributions to noncontrolling interests						(174)	(174)
Contributions from noncontrolling interests						2	2
Stock-based compensation		9					9
Spectra Energy common stock issuance		448					448
Reclassification of deferred gain on sale of units of Spectra Energy Partners, LP		59					59
Other, net		55				(12)	43
Ending Balance at Dec. 31, 2009	$1	$4,700	$1,096	$1,686	($358)	$540	$7,665

Summary of Operations and Signi

Summary of Operations and Significant Accounting Policies
	12 Months Ended Dec. 31, 2009 USD / shares
Summary of Operations and Significant Accounting Policies	1. Summary of Operations and Significant Accounting Policies The terms we, our, us, and Spectra Energy as used in this report refer collectively to Spectra Energy Corp and its subsidiaries unless the context suggests otherwise. These terms are used for convenience only and are not intended as a precise description of any separate legal entity within Spectra Energy. Nature of Operations.Spectra Energy Corp, through its subsidiaries and equity affiliates, owns and operates a large and diversified portfolio of complementary natural gas-related energy assets, operating in three key areas of the natural gas industry: gathering and processing, transmission and storage, and distribution. We provide transportation and storage of natural gas to customers in various regions of the northeastern and southeastern United States, the Maritime Provinces in Canada and the Pacific Northwest in the United States and Canada, and in the province of Ontario, Canada. We also provide natural gas sales and distribution services to retail customers in Ontario, and natural gas gathering and processing services to customers in western Canada. In addition, we own a 50% interest in DCP Midstream, LLC (DCP Midstream), one of the largest natural gas gatherers and processors in the United States. Spin-off from Duke Energy Corporation.On January2, 2007, Duke Energy Corporation (Duke Energy) completed the spin-off of Spectra Energy. Duke Energy contributed the natural gas businesses, primarily comprised of the Natural Gas Transmission and Field Services business segments of Duke Energy that were owned through Duke Energys then wholly owned subsidiary, Spectra Energy Capital, LLC (Spectra Capital). Duke Energy contributed its ownership interests in Spectra Capital to us and all of our outstanding common stock was distributed to Duke Energys shareholders. Duke Energys shareholders received one share of our common stock for every two shares of Duke Energy common stock, resulting in the issuance of approximately 631million shares of Spectra Energy on January2, 2007. In conjunction with the spin-off, on January2, 2007, Duke Energy transferred to us the assets and liabilities, including related tax effects, associated with our employee benefits and captive insurance positions, as well as miscellaneous corporate assets and liabilities. The net effect of these non-cash transfers is reflected as an increase of $12 million to Additional Paid-in Capital and a decrease of $100 million to Accumulated Other Comprehensive Income (AOCI) in the Consolidated Statement of Equity and Comprehensive Income during the year ended December31, 2007. The following summarizes the effect on the Consolidated Balance Sheet in 2007 as a result of the transfers: Increase (Decrease) to Equity (inmillions) Receivables $ (9 ) Other assets 186 Taxes accrued (5 ) Other current liabilities (65 ) Deferred income taxes 94 Other liabilities (289 ) Net equity decrease $ (88 ) See also Notes 9 and 23 for further discussion of captive insurance and employee benefit plans. Basis of Presentation.The

Spectra Energy Partners, LP

Spectra Energy Partners, LP
	12 Months Ended Dec. 31, 2009 USD / shares
Spectra Energy Partners, LP	2. Spectra Energy Partners, LP Formation.In 2007, Spectra Energy completed its initial public offering (IPO) of Spectra Energy Partners, a newly formed natural gas infrastructure master limited partnership. Spectra Energy contributed to Spectra Energy Partners 100% of the ownership of East Tennessee Natural Gas, LLC (East Tennessee), 50% of the ownership of Market Hub Partners, LLC, including the Moss Bluff and Egan natural gas storage operations, and a 24.5% interest in Gulfstream Natural Gas System, LLC (Gulfstream). Spectra Energy Partners issued 11.5million common units to the public in the offering, representing 17% of Spectra Energy Partners outstanding equity. Spectra Energy retained an 83% equity interest in Spectra Energy Partners, including its common units, subordinated units and a 2% general partner interest. Net cash of approximately $230 million was received by Spectra Energy Partners upon closing of the IPO. EquityNoncontrolling Interests increased approximately $169 million in the Consolidated Balance Sheet as a result of the issuance of the common units. Accounting rules in effect at the time of Spectra Energy Partners IPO allowed for recognition of a gain associated with such a sale only if the class of securities sold by the subsidiary did not contain any preference over the subsidiarys other classes of securities. Since the common units of Spectra Energy Partners have preferential cash distribution rights as compared to the subordinated units, we deferred recognition of the gain associated with the sale of the common units until the subordinated units owned by Spectra Energy are converted into common units with rights equivalent to the remaining unitholders. The deferred gain totaled approximately $59 million and is included in Regulatory and Other Deferred Credits and Other Liabilities in the Consolidated Balance Sheet at December31, 2008. As discussed in Note 1, the deferred gain was reclassified to Additional Paid-in Capital on January1, 2009 upon the adoption of ASC 810-10-65. Saltville.In 2008, Spectra Energy sold Saltville Gas Storage Company L.L.C. (Saltville) and the P-25 pipeline to Spectra Energy Partners for $107 million. Proceeds from the sale consisted of 4.2million Spectra Energy Partners common units, 0.1million general partner units and $5 million in cash. Spectra Energys ownership of Spectra Energy Partners increased from 83% to 84% as a result of the issuance of the new common and general partner units. No gain or loss was recognized on the disposition since this transaction represented a transfer of entities under common control. NOARK Pipeline System, Limited Partnership.In May2009, Spectra Energy Partners acquired all of the ownership interests of NOARK Pipeline System, Limited Partnership (NOARK) from Atlas Pipeline Partners, L.P. (Atlas) for approximately $295 million in cash. See Note 3 for further discussion. Sale of Spectra Energy Partners Common Units.In the second quarter of 2009, Spectra Energy Partners issued 9.8million common units to the public, representing limited partner interests, and 0.2million general partner units to Spectra Energy in connection with the refinancing

Acquisitions and Dispositions

Acquisitions and Dispositions
	12 Months Ended Dec. 31, 2009 USD / shares
Acquisitions and Dispositions	3. Acquisitions and Dispositions Acquisitions.We consolidate assets and liabilities from acquisitions as of the purchase date, and include earnings from acquisitions in consolidated earnings after the purchase date. Assets acquired and liabilities assumed are recorded at estimated fair values on the date of acquisition. The purchase price minus the estimated fair value of the acquired assets and liabilities meeting the definition of a business is recorded as goodwill. The allocation of the purchase price may be adjusted if additional information is received during the allocation period, which generally does not exceed one year from the consummation date. This allocation period may be longer for certain income tax items. In May 2009, Spectra Energy Partners acquired all of the ownership interests of NOARK from Atlas for approximately $295 million in cash. NOARKs assets consisted of 100% ownership interests in Ozark Gas Transmission, L.L.C. (Ozark Gas Transmission), a 565-mile Federal Energy Regulatory Commission (FERC) regulated interstate natural gas transmission system, and Ozark Gas Gathering, L.L.C., a 365-mile, fee-based, state-regulated natural gas gathering system. The transaction was initially funded by Spectra Energy Partners with $218 million drawn on its bank credit facility, $70 million borrowed under a credit facility with Spectra Energy that was created for the sole purpose of funding a portion of this acquisition, and $7 million of cash on hand. This transaction was partially refinanced by Spectra Energy Partners in the second quarter of 2009 through the issuance of units as discussed in Note 2. Funds from the sale of the partner units were used by Spectra Energy Partners to repay the $70 million owed to Spectra Energy and $142 million of the amount drawn on the Spectra Energy Partners bank credit facility. Effective with the repayment to Spectra Energy, the credit facility with Spectra Energy was terminated. The following table summarizes the fair values of the NOARK assets acquired and liabilities assumed: PurchasePrice Allocation (in millions) Purchase price $ 295 Current assets 7 Property, plant and equipment, net 139 Regulatory assets and deferred debits 5 Current liabilities (5 ) Deferred credits and other liabilities (1 ) Total assets acquired/liabilities assumed 145 Goodwill $ 150 In 2008, we acquired the 24.4million units of the Spectra Energy Income Fund (Income Fund) that were held by non-affiliated holders for 279million Canadian dollars (approximately $274 million). We now own 100% of the Canadian Midstream operations. Prior to the acquisition, the Income Fund indirectly held 54% of our consolidated Canadian Midstream operations and we indirectly held the remaining 46%. The transaction, primarily driven by changes in Canadian federal tax rules as related to income trusts, was accounted for as a step acquisition, using the purchase method of accounting. EquityNoncontrolling Interests decreased approximately $208 million as a result of the transaction. Pro forma results of

Business Segments

Business Segments
	12 Months Ended Dec. 31, 2009 USD / shares
Business Segments	4. Business Segments We manage our business in four reportable segments: U.S. Transmission, Distribution, Western Canada Transmission Processing and Field Services. The remainder of our business operations is presented as Other, and consists of unallocated corporate costs, wholly owned captive insurance subsidiaries, employee benefit plan assets and liabilities, and other miscellaneous activities. Our chief operating decision maker regularly reviews financial information about each of these segments in deciding how to allocate resources and evaluate performance. There is no aggregation within our defined business segments. U.S. Transmission provides transportation and storage of natural gas for customers in various regions of the northeastern and southeastern United States and the Maritime Provinces in Canada. The natural gas transmission and storage operations in the U.S. are primarily subject to the FERCs rules and regulations. Distribution provides retail natural gas distribution service in Ontario, Canada, as well as natural gas transportation and storage services to other utilities and energy market participants. These services are provided by Union Gas Limited (Union Gas), and are primarily subject to the rules and regulations of the OEB. Western Canada Transmission Processing provides transportation of natural gas, natural gas gathering and processing services, and NGLs extraction, fractionation, transportation, storage and marketing to customers in western Canada and the northern tier of the United States. This segment conducts business primarily through BC Pipeline, BC Field Services, and the NGL marketing and Canadian Midstream businesses. BC Pipelines and BC Field Services operations are primarily subject to the rules and regulations of Canadas National Energy Board (NEB). Field Services gathers and processes natural gas and fractionates, markets and trades NGLs. It conducts operations through DCP Midstream, which is owned 50% by us and 50% by ConocoPhillips. DCP Midstream gathers raw natural gas through gathering systems located in nine major natural gas producing regions: Mid-Continent, Rocky Mountain, East Texas-North Louisiana, Barnett Shale, Gulf Coast, South Texas, Central Texas, Antrim Shale and Permian Basin. Our reportable segments offer different products and services and are managed separately as business units. Management evaluates segment performance based on earnings before interest and taxes (EBIT) from continuing operations less noncontrolling interests related to those earnings. On a segment basis, EBIT represents earnings from continuing operations (both operating and non-operating) before interest and taxes, net of noncontrolling interests related to those earnings. Cash, cash equivalents and short-term investments are managed centrally, so the associated realized and unrealized gains and losses from foreign currency transactions and interest and dividend income on those balances are excluded from the segments EBIT. Transactions between reportable segments are accounted for on the same basis as transactions with unaffiliated third parties. Business Segment Data

Regulatory Matters

Regulatory Matters
	12 Months Ended Dec. 31, 2009 USD / shares
Regulatory Matters	5. Regulatory Matters Regulatory Assets and Liabilities.We record assets and liabilities that result from the regulated ratemaking process that would not be recorded under GAAP for non-regulated entities. See Note 1 for further discussion. Regulatory Assets and Liabilities December31, Recovery/ Refund PeriodEnds 2009 2008 (in millions) Regulatory Assets(a)(b) Net regulatory asset related to income taxes(c) $ 784 $ 732 (d) Project costs 33 35 2024 Vacation accrual 14 12 2010 Deferred debt expense/premium(e) 57 60 (d) Environmental clean-up costs 6 6 2017 Gas in storage (included in Inventory) 35 33 2010 Gas purchase costs (included in Other Current Assets) 11 14 2010 Other 24 17 (f) Total Regulatory Assets $ 964 $ 909 Regulatory Liabilities(b) Removal costs(e)(g) $ 389 $ 343 (h) Gas purchase costs(i) 185 15 2010 Pipeline rate credit(g) 32 33 (d) Storage and transportation liability(i) 19 27 2010 Earnings sharing liability(i) 4 14 2010 Account rebates(i) 18 (f) Other(g) 31 20 2010 Total Regulatory Liabilities $ 678 $ 452 (a) Included in Regulatory Assets and Deferred Debits unless otherwise noted. (b) All regulatory assets and liabilities are excluded from rate base unless otherwise noted. (c) All amounts are expected to be included in future rate filings. (d) Recovery/refund is over the life of the associated asset or liability. (e) Included in rate base. (f) Recovery/refund period currently unknown. (g) Included in Regulatory and Other Deferred Credits and Other Liabilities. (h) Liability is extinguished as the associated assets are retired. (i) Included in Other Current Liabilities. Rate Related Information Maritimes Northeast Pipeline, L.L.C. (MN LLC).On July1, 2009, MN LLC filed a rate case with the FERC. The rate case includes the impact of the Phase IV expansion facilities that went into service January15, 2009 and would result in lower recourse rates. The lower recourse rates would not impact the rates negotiated with customers for service, which are charged to customers for over 90% of MN LLCs capacity. Maritimes Northeast Pipeline Limited Partnership (MN LP).During 2008, MN LP operated under an NEB-approved toll settlement that expired December31, 2008. MN LP obtained approval to operate under interim rates, effective January1, 2009, that were set to equal the 2008 rates. The final 2009 toll settlement rates were approved by the NEB in April 2009. MN LP implemented the new rates on a prospective basis effective May1, 2009 such that the total tolls charged during 2009 result in revenues equal to those had the new 2009 rates been in effect for the entire year. Algonquin Gas Transmission, LLC (Algonquin).In 2005, Algonquin filed and the FERC accepted new negotiated ra

Income Taxes

Income Taxes
	12 Months Ended Dec. 31, 2009 USD / shares
Income Taxes	6. Income Taxes The following details the components of income tax expense: 2009 2008 2007 (in millions) Current income taxes Federal $ 35 $ 240 $ 316 State 1 19 21 Foreign 145 78 32 Total current income taxes 181 337 369 Deferred income taxes Federal 207 108 (15 ) State 17 6 4 Foreign (52 ) 45 82 Total deferred income taxes 172 159 71 Income tax expense from continuing operations 353 496 440 Income tax expense from discontinued operations 1 3 10 Total income tax expense $ 354 $ 499 $ 450 Earnings from Continuing Operations before Income Taxes 2009 2008 2007 (in millions) Domestic $ 807 $ 1,128 $ 954 Foreign 464 560 488 Total earnings from continuing operations before income taxes $ 1,271 $ 1,688 $ 1,442 Reconciliation of Income Tax Expense at the U.S. Federal Statutory Tax Rate to Actual Income Tax Expense from Continuing Operations 2009 2008 2007 (in millions) Income tax expense, computed at the statutory rate of 35% $ 445 $ 591 $ 505 State income tax, net of federal income tax effect 12 9 16 Tax differential on foreign earnings (62 ) (62 ) (45 ) Domestic production activities deduction (4 ) (13 ) (11 ) Noncontrolling interests (26 ) (22 ) (22 ) Other items, net (12 ) (7 ) (3 ) Total income tax expense from continuing operations-controlling interests $ 353 $ 496 $ 440 Effective tax rate 27.8 % 29.4 % 30.5 % Net Deferred Income Tax Liability Components December31, 2009 2008 (in millions) Deferred credits and other liabilities $ 183 $ 183 Federal effects of uncertain tax benefits 15 18 Other 57 12 Total deferred income tax assets 255 213 Valuation allowance (19 ) (12 ) Net deferred income tax assets 236 201 Investments and other assets (1,044 ) (928 ) Accelerated depreciation rates (2,198 ) (1,962 ) Regulatory assets and deferred debits (112 ) (126 ) Total deferred income tax liabilities (3,354 ) (3,016 ) Total net deferred income tax liabilities $ (3,118 ) $ (2,815 ) The above deferred tax amounts have been classified in the Consolidated Balance Sheets as follows: December31, 2009 2008 (in millions) Other current assets $ 59 $ 28 Other

Discontinued Operations

Discontinued Operations
	12 Months Ended Dec. 31, 2009 USD / shares
Discontinued Operations	7. Discontinued Operations The following table summarizes results classified as Income From Discontinued Operations, Net of Tax in the accompanying Consolidated Statements of Operations: Operating Revenues Pre-tax Earnings IncomeTax Expense Income From Discontinued Operations, Net of Tax (in millions) 2009 Western Canada Transmission Processing $ 2 $ 3 $ 1 $ 2 Other 171 3 3 Total consolidated $ 173 $ 6 $ 1 $ 5 2008 Western Canada Transmission Processing $ 24 $ 2 $ $ 2 Other 86 Total consolidated $ 110 $ 2 $ $ 2 2007 Western Canada Transmission Processing $ 38 $ 16 $ 4 $ 12 Other 1 20 7 13 Total consolidated $ 39 $ 36 $ 11 $ 25 The following significant transactions, the effects of which are included in Income From Discontinued Operations, Net of Tax on the Consolidated Statements of Operations, occurred during 2008 and 2007. 2008 In 2008, we closed on the sale of our interests in the Nevis and Brazeau River natural gas gathering and processing facilities, which were part of the Western Canada Transmission Processing segment. Total proceeds from the sale were 129million Canadian dollars (approximately $104 million) and we recognized a $2 million pre-tax and after-tax gain on the sale. In 2007, Spectra Energy LNG Sales, Inc. (Spectra Energy LNG) reached a settlement agreement related to an arbitration proceeding regarding Spectra Energy LNGs claims for the period prior to May 2002 under certain liquefied natural gas (LNG) transportation contracts with Sonatrach and Sonatrading Amsterdam B.V. (Sonatrach). See 2007 below for impacts of this settlement. In June 2008, the parties entered into a settlement agreement under which Spectra Energy LNGs claims for the period after May 2002 were satisfied pursuant to commercial transactions involving the purchase of propane from Sonatrach. We entered into associated agreements with an affiliate of DCP Midstream and another party for the sale of these propane volumes. Net purchases and sales of propane under these arrangements are reflected as Other discontinued operations. Spectra Energy LNG was one of the entities contributed by us to Duke Energy in 2006 in connection with our spin-off from Duke Energy that was subsequently reflected as discontinued operations. 2007 In 2007, $18 million of income ($11 million net of tax) was recorded related to the settlement of the Sonatrach proceeding described above.

Earnings per Common Share

Earnings per Common Share
	12 Months Ended Dec. 31, 2009 USD / shares
Earnings per Common Share	8. Earnings per Common Share Basic EPS is computed by dividing net income from controlling interests by the weighted-average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income from controlling interests by the diluted weighted-average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other agreements to issue common stock, such as stock options, stock-based performance unit awards and phantom stock awards, were exercised, settled or converted into common stock. The following table presents our basic and diluted EPS calculations: 2009 2008 2007 (inmillions,exceptper-shareamounts) Income from continuing operations, net of taxcontrolling interests $ 843 $ 1,129 $ 940 Income from discontinued operations, net of taxcontrolling interests 5 17 Net incomecontrolling interests $ 848 $ 1,129 $ 957 Weighted average common shares, outstanding Basic 642 622 632 Diluted 643 624 635 Basic earnings per common share Continuing operations $ 1.31 $ 1.82 $ 1.48 Discontinued operations, net of tax 0.01 0.03 Total basic earnings per common share $ 1.32 $ 1.82 $ 1.51 Diluted earnings per common share Continuing operations $ 1.31 $ 1.81 $ 1.48 Discontinued operations, net of tax 0.01 0.03 Total diluted earnings per common share $ 1.32 $ 1.81 $ 1.51 Weighted-average shares used to calculate diluted EPS includes the effect of certain options and restricted stock awards. Certain other options and stock awards related to approximately ten million shares for both 2009 and 2008, and nine million shares for 2007, were not included in the calculation of diluted EPS because either the option exercise prices were greater than the average market price of the shares during these periods or performance measures related to the awards had not yet been met.

Marketable Securities

Marketable Securities
	12 Months Ended Dec. 31, 2009 USD / shares
Marketable Securities	9. Marketable Securities At December31, 2009, we had no short-term and $7 million of long-term investments. At December31, 2008, we had $13 million short-term and $53 million of long-term investments. Purchases and sales of available-for-sale securities are presented on a gross basis within Cash Flows from Investing Activities in the accompanying Consolidated Statements of Cash Flows. Interest income totaled $4 million in 2009, $22 million in 2008 and $26 million in 2007, and is included in Other Income and Expenses, Net on the Consolidated Statements of Operations. Short-term investments.In 2009, we redeemed $13 million of short-term investments and had no purchases. In 2008, we transferred $13 million in investments associated with captive insurance from restricted reserves, and had no other sales or purchases. There were no purchases or sales of short-term investments in 2007. During 2008, the U.S. Transmission segment received shares of stock as consideration for a customer bankruptcy settlement and recorded a gain based on the quoted market price on the date of receipt of $31 million ($21 million after tax) which is reflected in Gains on Sales of Other Assets and Other, Net in the Consolidated Statements of Operations. The stock was subsequently sold in 2008, resulting in net proceeds of $27 million, reflected in Cash Flows from Operating Activities on the Consolidated Statements of Cash Flows, and a loss of $4 million recorded as Other Income and Expenses, Net. Long-term investments.In 2007,we invested a portion of the proceeds from Spectra Energy Partners IPO in financial instruments, including money market and debt securities that frequently had stated maturities of 20 years or more. These investments, which totaled $32 million as of December31, 2008, were pledged as collateral against Spectra Energy Partners term loan and were classified as Investments and Other AssetsOther on the Consolidated Balance Sheet. There was no term loan outstanding or investments pledged as collateral at December31, 2009. We received proceeds on sales of $32 million of these investments in 2009. We purchased $1,132 million and received proceeds on sales of $1,256 million of these investments in 2008, and purchased $1,439 million and received proceeds on sales of $1,284 million of these investments in 2007. On January2, 2007, Duke Energy distributed to us certain corporate assets and liabilities, including $96 million of marketable securities held in a grantor trust account associated with captive insurance losses of approximately the same amount transferred to us. These securities, which are generally comprised of short-term debt instruments, are classified as long-term since they are restricted for insurance reserves. We purchased $1 million and received proceeds on sales of $14 million of other long-term investments in 2009 within the captive insurance portfolio. We purchased $1 million and received proceeds on sales of $36 million in 2008, and purchased $93 million and received proceeds on sales of $121 million in 2007. The estimated fair values of long-term investments, classified as available-for-sale, are as follows:

Investments in and Loans to Unc

Investments in and Loans to Unconsolidated Affiliates and Related Party Transactions
	12 Months Ended Dec. 31, 2009 USD / shares
Investments in and Loans to Unconsolidated Affiliates and Related Party Transactions	10. Investments in and Loans to Unconsolidated Affiliates and Related Party Transactions Investments in affiliates for which we are not the primary beneficiary, but over which we have significant influence, are accounted for using the equity method. As of December31, 2009 and 2008, the carrying amount of investments in affiliates approximated the amount of underlying equity in net assets. We received distributions from our equity investments of $359 million in 2009, $995 million in 2008 and $656 million in 2007. Cumulative undistributed earnings of unconsolidated affiliates totaled $192 million at December31, 2009 and $58 million at December31, 2008. U.S. Transmission.As of December31, 2009, investments primarily include 50% interests in Gulfstream, SESH, and Steckman Ridge, LP (Steckman Ridge). Gulfstream is an interstate natural gas pipeline that extends from Mississippi and Alabama across the Gulf of Mexico to Florida. SESH, which was placed in service in the second half of 2008, is an interstate natural gas pipeline that extends from northeast Louisiana to Mobile County, Alabama where it connects to the Gulfstream system. Steckman Ridge, which was placed into service in the first half of 2009, is a storage project located in Bedford County, Pennsylvania. In 2007, we and CenterPoint Energy Gas Transmission Company (the co-owner of SESH) entered into a loan agreement with SESH whereby each member agreed to loan funds to SESH, as needed and on a pro rata basis, in connection with the construction of its pipeline facilities. In 2009, $137 million of the outstanding loan from us was re-characterized as a capital infusion to SESH. In addition, we received $186 million from SESH, recorded as Receipt From AffiliateRepayment of Loan on the Consolidated Statement of Cash Flows, representing full repayment of the remaining balance of the outstanding loan receivable. A portion of these funds were from the proceeds of a debt issuance by SESH. The loan receivable from SESH, including accrued interest, totaled $327 million at December31, 2008. We recorded interest income on the SESH loan of $4 million in 2009, $10 million in 2008 and $2 million in 2007. In2009, we received a $148 million special distribution from Gulfstream from the proceeds of a debt issuance by Gulfstream, of which $144 million was classified as Cash Flows from Investing ActivitiesDistributions Received From Unconsolidated Affiliates on the Consolidated Statement of Cash Flows. We have made loans to Steckman Ridge in connection with the construction of its storage facilities. The loans carry market-based interest rates and are due the earlier of December31, 2017 or coincident with the closing of any long-term financings by Steckman Ridge. The loan receivable from Steckman Ridge, including accrued interest, totaled $71 million at December31, 2009 and $45 million at December31, 2008. We recorded interest income on the Steckman Ridge loan of $1 million in 2009, $1 million in 2008 and less than $1 million in 2007. We are a 50% equity partner and operator for Islander East Pipeline Company, L.L.C. (Islander East), an entity formed to develop and own a pipeline that wou

Goodwill

Goodwill
	12 Months Ended Dec. 31, 2009 USD / shares
Goodwill	11. Goodwill The following tables show the components and activity within goodwill: December31, 2008 Increases(a) December31, 2009 (in millions) U.S. Transmission $ 2,019 $ 372 $ 2,391 Distribution 727 104 831 Western Canada Transmission Processing 635 91 726 Total consolidated $ 3,381 $ 567 $ 3,948 December31, 2007 Decreases(b) December31, 2008 (in millions) U.S. Transmission $ 2,334 $ (315 ) $ 2,019 Distribution 874 (147 ) 727 Western Canada Transmission Processing 740 (105 )(c) 635 Total consolidated $ 3,948 $ (567 ) $ 3,381 (a) Increases consist of foreign currency translation and $150 million of goodwill at U.S. Transmission associated with the acquisition of NOARK. See Note 3 for further discussion. (b) Decreases consist primarily of foreign currency translation. (c) Includes $66 million of goodwill associated with the acquisition of additional units of the Income Fund. See Note 3 for further discussion. The following goodwill amounts originating from the acquisition of Westcoast Energy, Inc. (Westcoast) in 2002 are included in Other within the segment data presented in Note 4: December31, 2009 2008 (in millions) U.S. Transmission $ 1,781 $ 1,559 Distribution 828 725 Western Canada Transmission Processing 690 603 No impairments of goodwill were recorded in 2009, 2008 or 2007. Based on the results of our annual impairment testing, the fair values of our reporting units with associated goodwill at December31, 2009 significantly exceeded their carrying value. See Note 1 for discussion of goodwill impairment testing and a change in 2009 of the goodwill impairment test date.

Property, Plant and Equipment

Property, Plant and Equipment
	12 Months Ended Dec. 31, 2009 USD / shares
Property, Plant and Equipment	12. Property, Plant and Equipment Estimated UsefulLife December31, 2009 2008 (years) (in millions) Plant Natural gas transmission 20100 $ 11,302 $ 10,241 Natural gas distribution 2560 2,484 2,026 Gathering and processing facilities 2540 3,069 2,398 Storage 10122 1,377 1,103 Other buildings and improvements 1050 94 84 Equipment 340 389 329 Vehicles 220 94 86 Land and land rights 4560 193 156 Construction in process 419 690 Other 482 539 456 Total property, plant and equipment 19,960 17,569 Total accumulated depreciation and amortization (4,613 ) (3,930 ) Total net property, plant and equipment $ 15,347 $ 13,639 We had no material capital leases at December31, 2009 or 2008. Almost 90% of our property, plant and equipment is regulated with estimated useful lives based on rates approved by the applicable regulatory authorities in the United States and Canada: the FERC, the NEB and the OEB. Composite weighted-average depreciation rates, including depreciation associated with businesses included in discontinued operations, were 3.17% for 2009, 3.29% for 2008 and 3.14% for 2007.

Asset Retirement Obligations

Asset Retirement Obligations
	12 Months Ended Dec. 31, 2009 USD / shares
Asset Retirement Obligations	13. Asset Retirement Obligations Our asset retirement obligations relate primarily to the retirement of certain gathering pipelines and processing facilities, obligations related to right-of-way agreements and contractual leases for land use. However, we have determined that a significant portion of our assets have an indeterminate life, and as such, the fair value of the retirement obligation is not reasonably estimable. These assets include onshore and some offshore pipelines, and certain processing plants and distribution facilities, whose retirement dates will depend primarily on the various natural gas supply sources that connect to our systems and the ongoing demand for natural gas usage in the markets we serve. We expect these supply sources and market demands to continue for the foreseeable future, and, therefore, are not able to estimate a retirement date that would result in asset retirement obligations. Asset retirement obligations are adjusted each period for liabilities incurred or settled during the period, accretion expense and any revisions made to the estimated cash flows. Reconciliation of Changes in Asset Retirement Obligation Liabilities 2009 2008 (in millions) Balance at beginning of year $ 84 $ 112 Accretion expense 6 6 Revisions in estimated cash flows 45 (7 ) Asset dispositions (8 ) Foreign currency exchange impact 13 (19 ) Liabilities settled (5 ) Balance at end of year(a) $ 143 $ 84 (a) Amounts included in Deferred Credits and Other Liabilities in the Consolidated Balance Sheets.

Debt and Credit Facilities

Debt and Credit Facilities
	12 Months Ended Dec. 31, 2009 USD / shares
Debt and Credit Facilities	14. Debt and Credit Facilities Summary of Debt and Related Terms Weighted- Average InterestRate YearDue December31, 2009 2008 (inmillions) Unsecured debt 6.7 % 20102038 $ 9,299 $ 9,154 Secured debt 5.9 % 20102019 418 407 Capital leases 1 Commercial paper(a) 0.3 % 162 428 Fair value hedge carrying value adjustment 20102018 51 68 Unamortized debt discount and premium, net (12 ) (11 ) Total debt(b) 9,918 10,047 Current maturities of long-term debt (809 ) (821 ) Short-term borrowings and commercial paper(c) (162 ) (936 ) Total long-term debt $ 8,947 $ 8,290 (a) The weighted-average days to maturity was 7 days as of December31, 2009 and 11 days as of December31, 2008. (b) As of December31, 2009 and 2008, respectively, $4,239 million and $3,766 million of debt were denominated in Canadian dollars. (c) Weighted-average rates on outstanding short-term borrowings and commercial paper was 0.3% as of December31, 2009 and 2.8% as of December31, 2008. In 2008, MN LLC paid $288 million to retire its outstanding bonds and bank debt, and an additional $54 million early-extinguishment premium for the bonds. The payment of the premium, a regulatory asset, is presented within Cash Flows from Financing ActivitiesOther on the Consolidated Statement of Cash Flows. Secured Debt.Secured debt includes project financing for MN LP. Ownership interests in MN LP and certain of its accounts, revenues, business contracts and other assets are pledged as collateral. Secured debt at December31, 2008 also included the term debt of Spectra Energy Partners which was collateralized by investment-grade securities. Floating Rate Debt.Unsecured, secured and other debt included approximately $402 million of floating-rate debt as of December31, 2009 and $1,339 million as of December31, 2008. The weighted average interest rate of borrowings outstanding that contained floating rates was 0.5% at December31, 2009 and 2.7% at December31, 2008. Annual Maturities December31, 2009 (inmillions) 2010 $ 809 2011 301 2012 772 2013 931 2014 1,167 Thereafter 5,776 Total long-term debt(a) $ 9,756 (a) Excludes short-term borrowings and commercial paper of $162 million. We have the ability under certain debt facilities to call and repay the obligations prior to scheduled maturities. Therefore, the actual timing of future cash repayments could be materially different than presented above. Available Credit Facilities and Restrictive Debt Covenants Expiration Date Credit Facilities Capacity Outstanding at December31, 2009 Commercial Paper Revolving Credit Letters of Credit Total (in millions) Spectra Capital(a) Multi-year syndicated 2012 $

Preferred Stock of Subsidiaries

Preferred Stock of Subsidiaries
	12 Months Ended Dec. 31, 2009 USD / shares
Preferred Stock of Subsidiaries	15. Preferred Stock of Subsidiaries In connection with the acquisition of Westcoast in 2002, we assumed preferred shares at Westcoast and Union Gas. The preferred shares are generally not redeemable prior to specified redemption dates. On or after those dates, the shares may be redeemed, in whole or in part, for cash at the option of Westcoast and Union, as applicable. The shares are not subject to any sinking fund or mandatory redemption and are not convertible into any other securities of Westcoast or Union. As redemption of the shares is not solely within our control, we have classified the preferred stock of subsidiaries as temporary equity on our Consolidated Balance Sheets. Dividends are cumulative and payable quarterly, and are included in Net IncomeNoncontrolling Interests in the Consolidated Statements of Operations.

Fair Value Measurements

Fair Value Measurements
	12 Months Ended Dec. 31, 2009 USD / shares
Fair Value Measurements	16. Fair Value Measurements The following table presents, for each of the fair value hierarchy levels, assets and liabilities that are measured and recorded at fair value on a recurring basis: December31, 2009 Description Consolidated Balance Sheet Caption Total Level1 Level2 Level3 (in millions) Money market funds Cash and cash equivalents $ 14 $ 14 $ $ Corporate debt securities Cash and cash equivalents 50 50 Derivative assetsnatural gas purchase contract Investments and other assetsother 15 15 Derivative assetsinterest rate swaps Investments and other assetsother 18 18 Money market funds Investments and other assetsother 25 25 Total Assets $ 122 $ 39 $ 68 $ 15 Derivative liabilitiesinterest rate swaps Deferred credits and other liabilities regulatory and other $ 17 $ $ 17 $ Total Liabilities $ 17 $ $ 17 $ December31, 2008 Description ConsolidatedBalanceSheetCaption Total Level1 Level2 Level3 (in millions) Money market funds Cash and cash equivalents $ 60 $ 60 $ $ Debt securities issued by foreign governments Cash and cash equivalents 6 6 Corporate debt securities Cash and cash equivalents 105 105 Money market funds Current assetsother 13 13 Derivative assetsfair value hedge on long-term debt Current assetsother 13 13 Money market funds Investments and other assetsother 51 51 Corporate debt securities Investments and other assetsother 25 25 Derivative assetsnatural gas purchase contract Investments and other assetsother 36 36 Derivative assetsinterest rate swaps Investments and other assetsother 53 53 Total Assets $ 362 $ 130 $ 196 $ 36 Derivative liabilitiesinterest rate swaps Deferred credits and other liabilities regulatory and other $ 23 $ $ 23 $ Total Liabilities $ 23 $ $ 23 $ The following table reconciles Level 3 assets and liabilities, which are measured at fair value on a recurring basis using significant unobservable inputs: Short-Term Derivative Asset Short-Term Derivative Liability Long-Term Derivative Asset Long-Term Derivative Liability (in millions) Fair value at December31, 2007 $ $ $ 47 $ (21 ) Total gains or losses (realized/unrealized): Included in earnings (1 ) (11 ) Included in Investments and Other AssetsOther Included in other comprehensive income (5 ) (10 ) Normal purchases and sales el

Commitments and Contingencies

Commitments and Contingencies
	12 Months Ended Dec. 31, 2009 USD / shares
Commitments and Contingencies	17. Commitments and Contingencies General Insurance We carry, either directly or through our captive insurance companies, insurance coverages consistent with companies engaged in similar commercial operations with similar type properties. Our insurance program includes (1)commercial general and excess liability insurance for liabilities to third parties for bodily injury and property damage resulting from our operations; (2)workers compensation liability coverage to required statutory limits; (3)automobile liability insurance for all owned, non-owned and hired vehicles covering liabilities to third parties for bodily injury and property damage; (4)insurance policies in support of the indemnification provisions of our by-laws; and (5)property insurance, including machinery breakdown, on an all-risk-replacement valued basis, onshore business interruption and extra expense. All coverages are subject to certain deductibles, terms and conditions common for companies with similar types of operations. Environmental We are subject to various U.S. federal, state and local regulations, as well as Canadian national and provincial regulations, regarding air and water quality, hazardous and solid waste disposal and other environmental matters. These regulations can change from time to time, imposing new obligations on us. Like others in the energy industry, we and our affiliates are responsible for environmental remediation at various contaminated sites. These include some properties that are part of our ongoing operations, sites formerly owned or used by us, and sites owned by third parties. Remediation typically involves management of contaminated soils and may involve groundwater remediation. Managed in conjunction with relevant international, federal, state/provincial and local agencies, activities vary with site conditions and locations, remedial requirements, complexity and sharing of responsibility. If remediation activities involve statutory joint and several liability provisions, strict liability, or cost recovery or contribution actions, we or our affiliates could potentially be held responsible for contamination caused by other parties. In some instances, we may share liability associated with contamination with other potentially responsible parties, and may also benefit from insurance policies or contractual indemnities that cover some or all cleanup costs. All of these sites generally are managed in the normal course of business or affiliated operations. Included in Deferred Credits and Other LiabilitiesRegulatory and Other on the Consolidated Balance Sheets are accruals related to extended environmental-related activities totaling $16 million at December31, 2009 and $17 million at December31, 2008. These accruals represent provisions for costs associated with remediation activities at some of our current and former sites, as well as other environmental contingent liabilities. Litigation Duke Energy Retirement Cash Balance Plan.A class action lawsuit was filed in federal court in South Carolina in 2006 against Duke Energy and the Duke Energy Retirement Cash Balance Plan. A second similar class action was also filed in

Guarantees and Indemnifications

Guarantees and Indemnifications
	12 Months Ended Dec. 31, 2009 USD / shares
Guarantees and Indemnifications	18. Guarantees and Indemnifications We have various financial guarantees and indemnifications which are issued in the normal course of business. As discussed below, these contracts include financial guarantees, stand-by letters of credit, debt guarantees, surety bonds and indemnifications. We enter into these arrangements to facilitate a commercial transaction with a third party by enhancing the value of the transaction to the third party. To varying degrees, these guarantees involve elements of performance and credit risk, which are not included on the Consolidated Balance Sheets. The possibility of having to honor our contingencies is largely dependent upon future operations of various subsidiaries, investees and other third parties, or the occurrence of certain future events. We have issued performance guarantees to customers and other third parties that guarantee the payment and performance of other parties, including certain non-wholly owned entities. In connection with our spin-off from Duke Energy, certain guarantees that were previously issued by us were assigned to, or replaced by, Duke Energy as guarantor in 2006. For any remaining guarantees of other Duke Energy obligations, Duke Energy has indemnified us against any losses incurred under these guarantee arrangements. The maximum potential amount of future payments we could have been required to make under these performance guarantees as of December31, 2009 was approximately $421 million, which has been indemnified by Duke Energy, as discussed above. One of our outstanding performance guarantees expires in 2028. The remaining guarantees have no contractual expiration. We have also issued joint and several guarantees to some of the Duke/Fluor Daniel (D/FD) project owners, guaranteeing the performance of D/FD under its engineering, procurement and construction contracts and other contractual commitments. D/FD is one of the entities transferred to Duke Energy in connection with our spin-off from Duke Energy. Substantially all of these guarantees have no contractual expiration and no stated maximum amount of future payments that we could be required to make. Fluor Enterprises Inc., as 50% owner in D/FD, has issued similar joint and several guarantees to the same D/FD project owners. In accordance with the D/FD partnership agreement, each of the partners is responsible for 50% of any payments to be made under those guarantees. Westcoast, a wholly owned subsidiary, has issued performance guarantees to third parties guaranteeing the performance of unconsolidated entities, such as equity method investments, and of entities previously sold by Westcoast to third parties. Those guarantees require Westcoast to make payment to the guaranteed third party upon the failure of such unconsolidated or sold entity to make payment under some of its contractual obligations, such as debt, purchase contracts and leases. Certain guarantees that were previously issued by Westcoast for obligations of entities that remained a part of Duke Energy are considered guarantees of third party performance; however, Duke Energy has indemnified us against any losses incurred under these guarantee arrange

Risk Management and Hedging Act

Risk Management and Hedging Activities
	12 Months Ended Dec. 31, 2009 USD / shares
Risk Management and Hedging Activities	19. Risk Management and Hedging Activities We are exposed to the impact of market fluctuations in the prices of NGLs and natural gas purchased primarily as a result of Empress operations in Canada. Exposure to interest rate risk exists as a result of the issuance of variable and fixed-rate debt and commercial paper. We are exposed to foreign currency risk from our Canadian operations. We employ established policies and procedures to manage our risks associated with these market fluctuations, which may include the use of forward physical transactions as well as other derivatives, primarily around interest rate exposures. Our equity investment affiliate, DCP Midstream, also has risk exposures primarily associated with market prices of NGLs and natural gas. DCP Midstream manages these risks separate from Spectra Energy, and utilizes various risk management strategies, including the use of commodity derivatives. Derivative Portfolio Carrying Value as of December31, 2009 Asset/(Liability) Maturity in2010 Maturity in2011 Maturity in2012 Maturity in 2013 and Thereafter Total Carrying Value (in millions) Hedging $ 3 $ 4 $ 4 $ 22 $ 33 Undesignated (17 ) (17 ) Total $ 3 $ 4 $ 4 $ 5 $ 16 These amounts represent the combination of amounts presented as assets (liabilities) for unrealized gains and losses on mark-to-market and hedging transactions on our Consolidated Balance Sheet and do not include any derivative positions of DCP Midstream. See Note 16 for information regarding the presentation of these derivative positions on our Consolidated Balance Sheets. Commodity Cash Flow Hedges.Our Empress operations are exposed to market fluctuations in the prices of natural gas and NGLs related to natural gas processing and marketing activities. We closely monitor the potential effects of commodity price changes and may choose to enter into contracts to protect margins for a portion of future sales and fuel expenses by using financial commodity instruments, such as swaps, forward contracts and options. There were no significant commodity cash flow hedge transactions during 2009, 2008 or 2007. Interest Rate Hedges.Changes in interest rates expose us to risk as a result of our issuance of variable and fixed-rate debt and commercial paper. We manage our interest rate exposure by limiting our variable-rate exposures to percentages of total debt and by monitoring the effects of market changes in interest rates. We also enter into financial derivative instruments, including, but not limited to, interest rate swaps and U.S. Treasury lock agreements to manage and mitigate interest rate risk exposure. For interest rate derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk is recognized in the Consolidated Statements of Operations. There were no material amounts of gains or losses, either effective or ineffective, re

Common Stock Issuance and Repur

Common Stock Issuance and Repurchases
	12 Months Ended Dec. 31, 2009 USD / shares
Common Stock Issuance and Repurchases	20. Common Stock Issuance and Repurchases On February13, 2009, we issued 32.2million shares of our common stock and received net proceeds of $448 million. We used the net proceeds to repay commercial paper as it matured. Borrowings from the commercial paper were used primarily for capital expenditures and for other general corporate purposes. In 2008, our Board of Directors authorized a share repurchase program of up to $600 million under which purchases of our common stock under the program were made from time to time in the open market. During 2008, we repurchased a total of 22.3million shares for $600 million, and the share repurchase program was concluded. The shares were retired upon repurchase and are presented as a reduction to Additional Paid-in Capital on the Consolidated Balance Sheet.

Effects of Changes in Noncontro

Effects of Changes in Noncontrolling Interests Ownership
	12 Months Ended Dec. 31, 2009 USD / shares
Effects of Changes in Noncontrolling Interests Ownership	21. Effects of Changes in Noncontrolling Interests Ownership The following table presents the effects of changes in our ownership interests in non-wholly owned consolidated subsidiaries: 2009 2008 2007 (in millions) Net IncomeControlling Interests $ 848 $ 1,129 $ 957 Increase in Additional Paid-in Capital resulting from sales of units of Spectra Energy Partners(a) 25 Total Net IncomeControlling Interests and changes in EquityControlling Interests $ 873 $ 1,129 $ 957 (a) See Note 2 for further discussion.

Stock-Based Compensation

Stock-Based Compensation
	12 Months Ended Dec. 31, 2009 USD / shares
Stock-Based Compensation	22. Stock-Based Compensation In December 2006, we adopted the Spectra Energy Corp 2007 Long-Term Incentive Plan (the 2007 LTIP). The 2007 LTIP provides for the granting of stock options, restricted stock awards and units, unrestricted stock awards and units, and other equity-based awards, to employees and other key individuals who perform services for us. A maximum of 30million shares of common stock may be awarded under the 2007 LTIP. Options granted under the 2007 LTIP are issued with exercise prices equal to the fair market value of our common stock on the grant date, have ten year terms and vest immediately or over terms not to exceed five years. Compensation expense related to stock options is recognized over the requisite service period. The requisite service period for stock options is the same as the vesting period, with the exception of retirement eligible employees, who have shorter requisite service periods ending when the employees become retirement eligible. Restricted, performance and phantom stock awards granted under the 2007 LTIP typically become 100% vested on the three-year anniversary of the grant date. The fair value of the awards granted is measured based on the fair value of the shares on the date of grant. Related compensation expense is recognized over the requisite service period which is the same as the vesting period. At the time of our spin-off from Duke Energy, Duke Energy converted stock options, restricted stock awards, performance awards and phantom stock awards (collectively, Stock-Based Awards) of Duke Energy common stock held by our employees and Duke Energy employees. One replacement Duke Energy Stock-Based Award and one-half Spectra Energy Stock-Based Award were distributed to each holder of Duke Energy Stock-Based Awards for each award held at the time of the spin-off. In the case of stock options, in accordance with the separation agreements, the option price conversion was based on the pre-distribution Duke Energy closing price of $19.14 relative to the Spectra Energy when-issued closing price of $28.62 on January3, 2007. The revised awards therefore maintained both the pre-conversion aggregate intrinsic value of each award and the ratio of the exercise price per share to the fair market value per share. Substantially all converted Stock-Based Awards are subject to the terms and conditions applicable to the original Duke Energy stock options, restricted stock awards, performance awards and phantom stock awards. The Spectra Energy Stock-Based Awards resulting from the conversion are considered to have been issued under the 2007 LTIP. The conversion of Duke Energy stock awards to Spectra Energy stock awards constituted a modification of those stock awards. However, since the modification was made to stock awards issued to employees for instruments that were originally issued as compensation and then modified, and that modification was made to the terms of the instrument solely to reflect an equity restructuring that occurred when the holders were no longer employees, no change in the recognition or the measurement (due to a change in classification) of those instruments occurred as (a)t

Employee Benefit Plans

Employee Benefit Plans
	12 Months Ended Dec. 31, 2009 USD / shares
Employee Benefit Plans	23. Employee Benefit Plans Retirement Plans.Effective with our spin-off from Duke Energy in January 2007, we established a new qualified non-contributory defined benefit (DB) retirement plan for U.S. employees and new non-qualified plans for various executive retirement and savings plans. The qualified plan covered U.S. employees using a cash balance formula. Under a cash balance formula, a plan participant accumulates a retirement benefit consisting of pay credits that are based upon a percentage (which may vary with age and years of service) of current eligible earnings and current interest credits. In accordance with the separation agreement with Duke Energy, net qualified pension plan assets of $49 million and $52 million in liabilities associated with various executive retirement and savings plans were transferred to us in 2007. In addition, our Westcoast subsidiary maintains qualified and non-qualified contributory and non-contributory DB and defined contribution (DC) retirement plans covering substantially all employees of our Canadian operations. The DB plans provide retirement benefits based on each plan participants years of service and final average earnings. Under the DC plan, company contributions are determined according to the terms of the plan and based on each plan participants age, years of service and current eligible earnings. We also provide non-qualified defined benefit supplemental pensions to all employees who retire under a defined benefit qualified pension plan and whose pension is limited by the maximum pension limits under the Income Tax Act (Canada). We report our Canadian benefit plans separately due to differences in actuarial assumptions. Our policy is to fund amounts for our U.S. qualified retirement plan on an actuarial basis to provide assets sufficient to meet benefits to be paid to plan participants. We did not make any contributions to our U.S. retirement plan in 2009, 2008 or 2007. We are considering making voluntary contributions to the plan in 2010, but have not made any decision at this time. Our policy is to fund our DB retirement plans in Canada on an actuarial basis and in accordance with Canadian pension standards legislation in order to accumulate assets sufficient to meet benefit obligations. Contributions to the DC retirement plan are determined in accordance with the terms of the plan. We made contributions to the Canadian qualified DB plans of $56 million in 2009, $36 million in 2008 and $41 million in 2007. We also made contributions to the Canadian DC plan of $5 million in 2009, $4 million in 2008 and $5 million in 2007. We anticipate making contributions of approximately $60 million to the Canadian qualified DB plans in 2010. Actuarial gains and losses are amortized over the average remaining service period of the active employees. The average remaining service period of the active employees covered by the qualified DB retirement plans is 10 years for both the U.S. and Canadian plans. The average remaining service period of the active employees covered by the non-qualified DB retirement plans is eight years for the U.S. plan and 14 years for the Canadian plans. We determ

Consolidating Financial Informa

Consolidating Financial Information
	12 Months Ended Dec. 31, 2009 USD / shares
Consolidating Financial Information	24. Consolidating Financial Information Spectra Energy Corp has agreed to fully and unconditionally guarantee the payment of principal and interest under all series of notes outstanding under the Senior Indenture of Spectra Capital, a wholly owned, consolidated subsidiary. In accordance with Securities and Exchange Commission (SEC) rules, the following condensed consolidating financial information is presented. The information shown for us and Spectra Capital is presented utilizing the equity method of accounting for investments in subsidiaries, as required. The non-guarantor subsidiaries column represents all wholly owned subsidiaries of Spectra Capital. This information should be read in conjunction with our accompanying Consolidated Financial Statements and notes thereto. Spectra Energy Corp Condensed Consolidating Statement of Operations Year Ended December31, 2009 (In millions) Spectra Energy Corp Spectra Capital Non-Guarantor Subsidiaries Eliminations Consolidated Total operating revenues $ $ $ 4,552 $ $ 4,552 Total operating expenses 10 7 3,071 3,088 Gains on sales of other assets and other, net 11 11 Operating income (loss) (10 ) (7 ) 1,492 1,475 Equity in earnings of unconsolidated affiliates 369 369 Equity in earnings of subsidiaries 856 1,238 (2,094 ) Other income and expenses, net 1 23 13 37 Interest expense 1 207 402 610 Earnings from continuing operations before income taxes 846 1,047 1,472 (2,094 ) 1,271 Income tax expense (benefit) from continuing operations (2 ) 191 164 353 Income from continuing operations 848 856 1,308 (2,094 ) 918 Income from discontinued operations, net of tax 5 5 Net income 848 856 1,313 (2,094 ) 923 Net incomenoncontrolling interests 75 75 Net incomecontrolling interests $ 848 $ 856 $ 1,238 $ (2,094 ) $ 848 Spectra Energy Corp Condensed Consolidating Statement of Operations Year Ended December31, 2008 (In millions) Spectra Energy Corp Spectra Capital Non-Guarantor Subsidiaries Eliminations Consolidated Total operating revenues $ $ $ 5,074 $ $ 5,074 Total operating expenses 7 3,629 3,636 Gains on sales of other assets and other, net 42 42 Operating income (loss) (7 ) 1,487 1,480 Equity in earnings of unconsolidated affiliates 778 778 Equity in earnings of subsidiaries 1,123

Quarterly Financial Data

Quarterly Financial Data (Unaudited)
	12 Months Ended Dec. 31, 2009 USD / shares
Quarterly Financial Data (Unaudited)	25. Quarterly Financial Data (Unaudited) First Quarter Second Quarter Third Quarter Fourth Quarter Total (in millions, except per share amounts) 2009 Operating revenues $ 1,384 $ 937 $ 933 $ 1,298 $ 4,552 Operating income 425 317 353 380 1,475 Net income 315 157 212 239 923 Net incomecontrolling interests 298 140 191 219 848 Earnings per share(a) Basic 0.47 0.22 0.30 0.34 1.32 Diluted 0.47 0.22 0.30 0.34 1.32 2008 Operating revenues 1,600 1,133 1,080 1,261 5,074 Operating income 493 343 340 304 1,480 Net income 386 309 312 187 1,194 Net incomecontrolling interests 367 295 296 171 1,129 Earnings per share(a) Basic 0.58 0.47 0.48 0.28 1.82 Diluted 0.58 0.47 0.48 0.28 1.81 (a) Quarterly earnings-per-share amounts are stand-alone calculations and may not be additive to full-year amounts due to rounding. Unusual or Infrequent Items During the first quarter of 2009, we recorded in Equity in Earnings of Unconsolidated Affiliates in the Consolidated Statement of Operations a $135 million gain ($85 million after tax) associated with the reclassification by DCP Midstream of certain deferred gains on sales of common units in its master limited partnership. See Note 10 for further discussion. During the fourth quarter of 2008, we recorded a $44 million charge ($30 million after tax) representing our share of impaired assets associated with the Islander East pipeline project, of which $12 million is included in Operating, Maintenance and Other expense and $32 million is included in Equity in Earnings of Unconsolidated Affiliates. See Note 10 for further discussion. During the second quarter of 2008, we recorded a $31 million gain ($21 million after tax) related to consideration received for a customer bankruptcy settlement which is included in Gains on Sales of Other Assets and Other, Net. See Note 9 for further discussion.

Subsequent Events

Subsequent Events
	12 Months Ended Dec. 31, 2009 USD / shares
Subsequent Events	26. Subsequent Events We have evaluated significant events and transactions that occurred from January1, 2010 through February25, 2010 and have determined that there were no events or transactions other than those disclosed in this report, if any, that would require recognition or disclosure in our Consolidated Financial Statements for the year ended December31, 2009.

SCHEDULE II-VALUATION AND QUALI

SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
	12 Months Ended Dec. 31, 2009 USD / shares
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS AND RESERVES	SPECTRA ENERGY CORP SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS AND RESERVES Balanceat Beginning of Period Additions: Deductions(a) Balanceat End of Period Chargedto Expense Chargedto Other Accounts (in millions) December31, 2009: Allowance for doubtful accounts $ 12 $ 4 $ 2 $ 4 $ 14 Other(b) 175 60 12 108 139 $ 187 $ 64 $ 14 $ 112 $ 153 December31, 2008: Allowance for doubtful accounts $ 22 $ 7 $ $ 17 $ 12 Other(b) 204 34 5 68 175 $ 226 $ 41 $ 5 $ 85 $ 187 December31, 2007: Allowance for doubtful accounts $ 13 $ 17 $ $ 8 $ 22 Other(b) 236 20 98 150 204 $ 249 $ 37 $ 98 $ 158 $ 226 (a) Principally cash payments and reserve reversals. (b) Principally income tax reserves, insurance related reserves, litigation and other reserves, included primarily in Regulatory and Other Deferred Credits and Other Liabilities on the Consolidated Balance Sheets.

Document Information

Document Information
	12 Months Ended Dec. 31, 2009 USD / shares
Document Type	10-K
Amendment Flag	false
Document Period End Date	2009-12-31

Entity Information

Entity Information (USD $)
	12 Months Ended Dec. 31, 2009	Feb. 12, 2010	Jun. 30, 2009
Trading Symbol	SE
Entity Registrant Name	Spectra Energy Corp.
Entity Central Index Key	0001373835
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		647,483,298
Entity Public Float			$10,900,000,000