UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C.
20549


____________________




Form 10-Q


(Mark
One)


R
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the quarterly period ended March 31, 2009OR£
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE
      SECURITIES EXCHANGE ACT OF
      1934For
      the transition period
      fromto




Commission
File Number 1-4101
  Tennessee
Gas Pipeline Company


(Exact
Name of Registrant as Specified in Its Charter)


Delaware
                74-1056569(State
      or Other Jurisdictionof
      Incorporation or Organization)
                (I.R.S.
      EmployerIdentification
      No.)El
      Paso Building1001
      Louisiana Street
                  Houston,
      Texas
                77002(Address
      of Principal Executive Offices)
                (Zip
      Code)
 
 Telephone
Number: (713) 420-2600
 Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past
90 days.  YesR   No £
  Indicate by check
mark whether the registrant has submitted electronically and posted on its
corporate Website, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post
such files).   Yes £   No £
 
 Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, or
a non-accelerated filer, or a smaller reporting company. See the
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange
Act.
  Large accelerated
      filer o
                    Accelerated
      filer o
                    Non-accelerated
      filerþ
                      (Do
      not check if a smaller reporting company)
                    Smaller Reporting
      Companyo
 
 Indicate by check
mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o Noþ
  Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.
  Common
stock, par value $5 per share. Shares outstanding on May 11, 2009:
208
  TENNESSEE
GAS PIPELINE COMPANY MEETS THE CONDITIONS OFGENERAL
INSTRUCTION H(1)(a) AND (b) TO FORM 10-Q AND IS THEREFORE FILING
THIS
REPORT WITH A REDUCED DISCLOSURE FORMAT AS PERMITTED BY SUCH
INSTRUCTION.












TENNESSEE
GAS PIPELINE COMPANY




TABLE
OF CONTENTS




Caption
            
            PagePART I —
      Financial InformationItem
      1.
            Financial
      Statements
            1Item
      2.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            9Item
      3.
            Quantitative
      and Qualitative Disclosures About Market Risk
            *Item
      4.
            Controls and
      Procedures
            13PART
      II — Other InformationItem
      1.
            Legal
      Proceedings
            14Item
      1A.
            Risk
      Factors
            14Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            *Item
      3.
            Defaults Upon
      Senior Securities
            *Item
      4.
            Submission of
      Matters to a Vote of Security Holders
            *Item
      5.
            Other
      Information
            14Item
      6.
            Exhibits
            15Signatures
            16









* We have not
      included a response to this item in this document since no response is
      required pursuant to the  reduced disclosure format permitted by
      General Instruction H to
Form 10-Q.
  Below is a list of
terms that are common to our industry and used throughout this
document:
  /d
              = per
      day
              BBtu = billion
      British thermal units
   When we refer
      to cubic feet measurements, all measurements are at a pressure of
      14.73 pounds per square inch.
 When we refer
      to “us”, “we”, “our”, or “ours”, we are describing Tennessee Gas Pipeline
      Company and/or our
subsidiaries.


























i




PART
I — FINANCIAL INFORMATION





Item 1.  Financial
Statements





TENNESSEE
GAS PIPELINE COMPANY





CONDENSED
CONSOLIDATED STATEMENTS OF INCOME


(In
millions)


(Unaudited)





Quarter
      Ended
              March 31,2009
            
            
            2008Operating
      revenues
            
            $
            266
            
            
            $
            245Operating
      expensesOperation
      and maintenance
            
            
            90
            
            
            
            81Depreciation
      and amortization
            
            
            46
            
            
            
            45Loss
      on long-lived assets
            
            
            —
            
            
            
            16Taxes,
      other than income taxes
            
            
            16
            
            
            
            15152
            
            
            
            157Operating
      income
            
            
            114
            
            
            
            88Earnings from
      unconsolidated affiliate
            
            
            3
            
            
            
            4Other income,
      net
            
            
            3
            
            
            
            4Interest and
      debt expense
            
            
            (38
            )
            
            
            (33
            )Affiliated
      interest income, net
            
            
            4
            
            
            
            9Income before
      income taxes
            
            
            86
            
            
            
            72Income
      taxes
            
            
            33
            
            
            
            29Net
      income
            
            $
            53
            
            
            $
            43





See accompanying
notes.
































1


TENNESSEE
GAS PIPELINE COMPANY




CONDENSED
CONSOLIDATED BALANCE SHEETS


(In millions,
except share amounts)


(Unaudited)




March
      31,
              2009
            
            
            December 31,
              2008ASSETSCurrent
      assetsCash and cash
      equivalents
            
            $
            200
            
            
            $
            —Accounts and
      notes receivableCustomer
            
            
            21
            
            
            
            24Affiliates
            
            
            69
            
            
            
            81Other
            
            
            6
            
            
            
            13Materials and
      supplies
            
            
            41
            
            
            
            41Deferred
      income taxes
            
            
            17
            
            
            
            8Other
            
            
            5
            
            
            
            10Total current
      assets
            
            
            359
            
            
            
            177Property,
      plant and equipment, at cost
            
            
            4,414
            
            
            
            4,365Less
      accumulated depreciation and amortization
            
            
            909
            
            
            
            8843,505
            
            
            
            3,481Additional
      acquisition cost assigned to utility plant, net
            
            
            1,992
            
            
            
            2,002Total
      property, plant and equipment, net
            
            
            5,497
            
            
            
            5,483Other
      assetsNotes
      receivable from affiliates
            
            
            917
            
            
            
            800Investment in
      unconsolidated affiliate
            
            
            80
            
            
            
            81Other
            
            
            64
            
            
            
            531,061
            
            
            
            934Total
      assets
            
            $
            6,917
            
            
            $
            6,594LIABILITIES
      AND STOCKHOLDER’S EQUITYCurrent
      liabilitiesAccounts
      payableTrade
            
            $
            43
            
            
            $
            54Affiliates
            
            
            31
            
            
            
            36Other
            
            
            41
            
            
            
            52Taxes
      payable
            
            
            98
            
            
            
            82Accrued
      interest
            
            
            47
            
            
            
            24Regulatory
      liability
            
            
            29
            
            
            
            3Contractual
      deposits
            
            
            55
            
            
            
            60Other
            
            
            25
            
            
            
            28Total current
      liabilities
            
            
            369
            
            
            
            339Long-term
      debt
            
            
            1,843
            
            
            
            1,605Other
      liabilitiesDeferred
      income taxes
            
            
            1,329
            
            
            
            1,314Regulatory
      liabilities
            
            
            166
            
            
            
            191Other
            
            
            86
            
            
            
            741,581
            
            
            
            1,579Commitments
      and contingencies (Note 4)Stockholder’s
      equityCommon stock,
      par value $5 per share; 300 shares authorized; 208 shares
      issued and outstanding
            
            
            —
            
            
            
            —Additional
      paid-in capital
            
            
            2,209
            
            
            
            2,209Retained
      earnings
            
            
            1,249
            
            
            
            1,196Note
      receivable from affiliate
            
            
            (334
            )
            
            
            (334
            )Total
      stockholder’s equity
            
            
            3,124
            
            
            
            3,071Total
      liabilities and stockholder’s equity
            
            $
            6,917
            
            
            $
            6,594




See accompanying
notes.


2





TENNESSEE
GAS PIPELINE COMPANY




CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(In millions)


(Unaudited)




Quarter
      Ended
              March 31,2009
            
            
            2008Cash flows
      from operating activitiesNet
      income
            
            $
            53
            
            
            $
            43Adjustments
      to reconcile net income to net cash from operating
      activitiesDepreciation
      and amortization
            
            
            46
            
            
            
            45Deferred
      income taxes
            
            
            6
            
            
            
            25Earnings
      from unconsolidated affiliate, adjusted for cash
      distributions
            
            
            1
            
            
            
            —Loss
      on long-lived assets
            
            
            —
            
            
            
            16Other
      non-cash income items
            
            
            (1
            )
            
            
            (2
            )Asset
      and liability changes
            
            
            26
            
            
            
            (4
            )Net
      cash provided by operating activities
            
            
            131
            
            
            
            123Cash flows
      from investing activitiesAdditions
      to property, plant and equipment
            
            
            (67
            )
            
            
            (43
            )Net
      change in notes receivable from affiliates
            
            
            (117
            )
            
            
            (82
            )Other
            
            
            18
            
            
            
            2Net
      cash used in investing activities
            
            
            (166
            )
            
            
            (123
            )Cash flows
      from financing activitiesNet
      proceeds from the issuance of long-term debt
            
            
            235
            
            
            
            —Net
      cash provided by financing activities
            
            
            235
            
            
            
            —Net change in
      cash and cash equivalents
            
            
            200
            
            
            
            —Cash and cash
      equivalentsBeginning
      of period
            
            
            —
            
            
            
            —End
      of period
            
            $
            200
            
            
            $
            —




See accompanying
notes.






































3


TENNESSEE
GAS PIPELINE COMPANY




NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




1. Basis
of Presentation and Significant Accounting Policies




Basis
of Presentation




We are an indirect
wholly owned subsidiary of El Paso Corporation (El Paso). We prepared
this Quarterly Report on Form 10-Q under the rules and regulations of the
United States Securities and Exchange Commission (SEC). Because this is an
interim period filing presented using a condensed format, it does not include
all of the disclosures required by U.S. generally accepted accounting
principles. You should read this Quarterly Report on Form 10-Q along with
our 2008 Annual Report on Form 10-K, which includes a summary of our
significant accounting policies and other disclosures. The financial statements
as of March 31, 2009, and for the quarters ended March 31, 2009 and 2008,
are unaudited. We derived the condensed consolidated balance sheet as of
December 31, 2008, from the audited balance sheet filed in our 2008
Annual Report on Form 10-K. In our opinion, we have made all adjustments,
which are of a normal recurring nature, to fairly present our interim period
results. Due to the seasonal nature of our business, information for interim
periods may not be indicative of our operating results for the entire
year.




Significant
Accounting Policies




The information
below provides an update of our significant accounting policies and accounting
pronouncements as discussed in our 2008 Annual Report on Form
10-K.




Fair
Value Measurements.On January 1, 2009, we adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 157, Fair
Value Measurements, for our non-financial assets and liabilities that are
not measured at fair value on a recurring basis, which primarily relates to any
impairment of long-lived assets or investments.  During the quarter
ended March 31, 2009, there were no fair value measurements recorded on a
non-recurring basis.




Business
Combinations and Noncontrolling Interests.On January 1, 2009, we adopted
SFAS No. 141(R), Business
Combinations, and SFAS No. 160, Noncontrolling
Interests in Consolidated Financial Statements, which provide revised
guidance on the accounting for acquisitions of businesses and transactions
involving noncontrolling interests. SFAS No. 141(R) changes the current guidance torequire
that all acquired assets, liabilities, noncontrolling interests and certain
contingencies be measured at fair value, and certain other acquisition-related
costs be expensed rather than capitalized. SFAS No. 160 requires that all
transactions with noncontrolling interest holders, including the issuance and
repurchase of noncontrolling interests, be accounted for as equity transactions
unless a change in control of the subsidiary occurs. The adoption of these
standards did not have an impact on our financial statements.  Application
of these standards will impact transactions that are entered into after December
31, 2008.
  2.
Gain/Loss on Long-Lived Assets




In the first
quarter of 2008, we recorded impairments of $16 million, primarily related to
our decision not to proceed with the Essex-Middlesex Lateral project due to its
prolonged permitting process and changing market conditions.




3. Debt




In January 2009, we
issued $250 million of 8.00% senior notes due in February 2016 and received net
proceeds of $235 million.




4. Commitments
and Contingencies




Legal
Proceedings




Gas
Measurement Cases. We and a number of our affiliates were named
defendants in actions that generally allege mismeasurement of natural gas
volumes and/or heating content resulting in the underpayment of royalties. The
first set of cases was filed in 1997 by an individual under the False Claims Act
and have been consolidated for pretrial purposes (Inre:
Natural Gas Royalties Qui Tam Litigation,  U.S. District Court
for the District of Wyoming). These complaints allege an industry-wide
conspiracy to underreport the heating value as well as the volumes of the
natural gas produced from federal and Native American lands. In October 2006,
the U.S. District Judge issued an order dismissing all claims against all
defendants. In March 2009, the Tenth Circuit Court of Appeals affirmed the
dismissals and in April 2009, a motion for reconsideration was
filed.


4






Similar allegations
were filed in a second set of actions initiated in 1999 inWill Price, et al. v. Gas Pipelines and Their Predecessors, et al., in
the District Court of Stevens County, Kansas. The plaintiffs currently seek
certification of a class of royalty owners in wells on non-federal and
non-Native American lands in Kansas, Wyoming and Colorado. Motions for class
certification have been briefed and argued in the proceedings and the parties
are awaiting the court’s ruling. The plaintiff seeks an unspecified amount of
monetary damages in the form of additional royalty payments (along with
interest, expenses and punitive damages) and injunctive relief with regard to
future gas measurement practices. Our costs and legal exposure related to these
lawsuits and claims are not currently determinable.




In addition to the
above proceedings, we and our subsidiaries and affiliates are named defendants
in numerous lawsuits and governmental proceedings that arise in the ordinary
course of our business. For each of these matters, we evaluate the merits of the
case, our exposure to the matter, possible legal or settlement strategies and
the likelihood of an unfavorable outcome. If we determine that an unfavorable
outcome is probable and can be estimated, we establish the necessary accruals.
While the outcome of these matters, including those discussed above, cannot be
predicted with certainty, and there are still uncertainties related to the costs
we may incur, based upon our evaluation and experience to date, we had no
accruals for our outstanding legal matters at March 31, 2009. It is possible,
however,  that new information or future developments could require us
to reassess our potential exposure related to these matters and establish our
accruals accordingly.




Environmental
Matters




We are subject to
federal, state and local laws and regulations governing environmental quality
and pollution control. These laws and regulations require us to remove or remedy
the effect on the environment of the disposal or release of specified substances
at current and former operating sites. At March 31, 2009, we had accrued
approximately $6 million for expected remediation costs and associated onsite,
offsite and groundwater technical studies and for related environmental legal
costs; however, we estimate that our exposure could be as high as $8
million.




Our accrual
represents a combination of two estimation methodologies. First, where the most
likely outcome can be reasonably estimated, that cost has been accrued. Second,
where the most likely outcome cannot be estimated, a range of costs is
established and if no one amount in that range is more likely than any other,
the lower end of the expected range has been accrued. Our environmental
remediation projects are in various stages of completion. Our recorded
liabilities reflect our current estimates of amounts we will expend to remediate
these sites. However, depending on the stage of completion or assessment, the
ultimate extent of contamination or remediation required may not be known. As
additional assessments occur or remediation efforts continue, we may incur
additional liabilities.




For the remainder
of 2009, we estimate that our total remediation expenditures will be
approximately $1 million, which will be expended under government directed
clean-up programs.




Polychlorinated
Biphenyls (PCB) Cost Recoveriesand
Refund. Since
1994, we have been conducting remediation activities at certain of our
compressor stations associated with PCB’s and other hazardous materials. We have
collected amounts, substantially in excess of remediation costs actually
incurred to date, through a surcharge to our customers under a settlement
approved by the Federal Energy Regulatory Commission (FERC) in November
1995.  On April 13, 2009, we filed an amendment to the 1995 settlement
that, if approved by the FERC, would provide for interim refunds of
approximately $157 million of our collected amounts to be paid in quarterly
installments, with interest, over a three year period commencing the later of
July 1, 2009 (or within 20 days of  the FERC's approval).  Our
refund obligations are recorded as regulatory liabilities on our balance sheet
and as of March 31, 2009, we have classified approximately $29 million as
current liabilities based on the timing of when these amounts are expected to be
refunded to our customers.  At this time, we are uncertain as to when
the FERC may approve the pending amendment.










5






Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA) Matters.
We have received notice that we could be designated, or have been asked for
information to determine whether we could be designated, as a Potentially
Responsible Party (PRP) with respect to four active sites under the CERCLA or
state equivalents. We have sought to resolve our liability as a PRP at these
sites through indemnification by third parties and settlements which provide for
payment of our allocable share of remediation costs. As of March 31, 2009, we
have estimated our share of the remediation costs at these sites to be between
$1 million and $2 million. Because the clean-up costs are estimates and are
subject to revision as more information becomes available about the extent of
remediation required, and in some cases we have asserted a defense to any
liability, our estimates could change. Moreover, liability under the federal
CERCLA statute is joint and several, meaning that we could be required to pay in
excess of our pro rata share of remediation costs. Our understanding of the
financial strength of other PRPs has been considered, where appropriate, in
estimating our liabilities. Accruals for these matters are included in the
environmental reserve discussed above.




It is possible that
new information or future developments could require us to reassess our
potential exposure related to environmental matters. We may incur significant
costs and liabilities in order to comply with existing environmental laws and
regulations. It is also possible that other developments, such as increasingly
strict environmental laws, regulations and orders of regulatory agencies, as
well as claims for damages to property and the environment or injuries to
employees and other persons resulting from our current or past operations, could
result in substantial costs and liabilities in the future. As this information
becomes available, or other relevant developments occur, we will adjust our
accrual amounts accordingly. While there are still uncertainties related to the
ultimate costs we may incur, based upon our evaluation and experience to date,
we believe our reserves are adequate.




Regulatory
Matters




Notice
of Proposed Rulemaking. In October 2007, the Minerals Management Service
(MMS) issued a Notice of Proposed Rulemaking for Oil and Gas and Sulphur
Operations in the Outer Continental Shelf (OCS) — Pipelines and Pipeline
Rights-of-Way. If adopted, the proposed rules would substantially revise MMS OCS
pipeline and rights-of-way regulations. The proposed rules would have the effect
of: (1) increasing the financial obligations of entities, like us, which have
pipelines and pipeline rights-of-way in the OCS; (2) increasing the regulatory
requirements imposed on the operation and maintenance of existing pipelines and
rights of way in the OCS; and (3) increasing the requirements and preconditions
for obtaining new rights-of-way in the OCS.




Greenhouse
Gas (GHG) Emissions.Legislative and regulatory measures to
address GHG emissions are in various phases of discussions or implementation at
the international, national, regional and state levels. In the United States, it
is likely that federal legislation requiring GHG controls will be enacted in the
next few years. In addition, the United States Environmental Protection Agency
(EPA) is considering initiating a rulemaking to regulate GHGs under the Clean
Air Act. Furthermore, the EPA recently issued proposed regulations requiring
monitoring and reporting of GHG emissions on an annual basis economy wide,
including extensive new monitoring and reporting requirements applicable to our
industry.  The EPA has also recently proposed findings that GHGs in
the atmosphere endanger public health and welfare, and that emissions from
mobile sources cause or contribute to GHGs in the atmosphere.  These
proposed findings, if finalized as proposed, would not immediately affect our
operations, but standards eventually promulgated pursuant to these findings
could affect our operations and ability to obtain air permits for new and
modified facilities.  Legislation and regulation are also in various
stages of discussions or implementation in many of the states in which we
operate. Lawsuits have been filed seeking to force the federal government to
regulate GHG emissions under the Clean Air Act and to require individual
companies to reduce GHG emissions from their operations. These and other
lawsuits may result in decisions by state and federal courts and agencies that
could impact our operations and ability to obtain certifications and permits to
construct future projects. Our costs and legal exposure related to GHG
regulations are not currently determinable.












6





5. Investment
in Unconsolidated Affiliate and Transactions with Affiliates




Investment
in Unconsolidated Affiliate




We have a 50
percent ownership interest in Bear Creek Storage Company (Bear Creek), a joint
venture with Southern Natural Gas Company, our affiliate, and we received $4
million in dividends from Bear Creek for the quarters ended March 31, 2009
and 2008.  Summarized income statement information for our proportionate
share of the income of this investment for the quarters ended March 31 is
as follows:




2009
            
            
            2008(In
      millions)Operating
      results data:Operating
      revenues
            
            $
            5
            
            
            $
            6Operating
      expenses
            
            
            2
            
            
            
            2Income
      from continuing operations and net income
            
            
            3
            
            
            
            4




Transactions
with Affiliates




Cash
Management Program and Other Notes Receivable.We participate in El
Paso’s cash management program which matches short-term cash surpluses and needs
of participating affiliates, thus minimizing total borrowings from outside
sources. El Paso uses the cash management program to settle intercompany
transactions between participating affiliates. We have historically advanced
cash to El Paso in exchange for an affiliated note receivable that is due upon
demand. At March 31, 2009 and December 31, 2008, we had notes receivable from El
Paso of $917 million and $800 million. We have classified these amounts as
non-current on our balance sheets based on the net amount we anticipate using in
the next twelve months considering available cash sources and
needs.  The interest rate on these variable rate notes was 1.7% at
March 31, 2009 and 3.2% at December 31, 2008.




At December 31,
2008, we had non-interest bearing notes receivable of $334 million from an El
Paso affiliate. These notes are reflected as a reduction of our stockholder’s
equity based on uncertainties regarding the timing and method through which El
Paso will settle these balances.




IncomeTaxes.El Paso files consolidated U.S. federal and certain state tax returns
which include our taxable income. In certain states, we file and pay taxes
directly to the state taxing authorities. At March 31, 2009 and December 31,
2008, we had federal and state income taxes payable of $84 million and $58
million. The majority of these balances, as well as deferred income taxes and
amounts associated with the resolution of unrecognized tax benefits, will become
payable to El Paso.




Accounts
Receivable Sales Program.We sell certain accounts receivable to a
qualifying special purpose entity (QSPE)whose
purpose is solely to invest in our receivables, which are short-term assets that
generally settle within 60 days. As of March 31, 2009 and December 31, 2008, we
sold approximately $83 million and $97 million of receivables, received cash
of approximately $38 million in both periods and received subordinated
beneficial interests of approximately $45 million and $58 million.  The
QSPE also issued senior beneficial interests on the receivables sold to a third
party financial institution, which totaled $38 million and $39 million as of
March 31, 2009 and December 31, 2008. We recognized a loss of less than $1
million during the quarters ended March 31, 2009 and 2008. We reflect the
subordinated interest in receivables sold (adjusted for subsequent collections)
at their fair value on the date they are issued as accounts receivable from
affiliate in our balance sheets. Our ability to recover our carrying value of
our subordinated beneficial interests is based on the collectibility of the
underlying receivables sold to the QSPE. We reflect accounts receivable sold
under this program and changes in the subordinated beneficial interests as
operating cash flows in our statement of cash flows. Under the agreements, we
earn a fee for servicing the receivables and performing all administrative
duties for the QSPE which is reflected as a reduction of operation and
maintenance expense in our income statement. The fair value of these servicing
and administrative agreements as well as the fees earned were not material to
our financial statements for the quarters ended March 31, 2009 and
2008.




Other
Affiliate Balances. At March 31, 2009 and December 31, 2008, we had
contractual deposits from our affiliates of $9
million.








7


Affiliate
Revenues and Expenses.We enter into transactions with our affiliates within the ordinary course
of business. For a further discussion of our affiliated transactions, see our
2008 Annual Report on Form 10-K. The following table shows revenues and charges
from our affiliates for the quarters ended March
31:





2009
            
            
            2008(In
      millions)Revenues from
      affiliates
            
            $
            4
            
            
            $
            5Operation and
      maintenance expenses from affiliates
            
            
            17
            
            
            
            15Reimbursements
      of operating expenses charged to affiliates
            
            
            12
            
            
            
            12



















































8


Item 2. Management’s
Discussion and Analysis of Financial Condition and Results
of Operations




The information
required by this Item is presented in a reduced disclosure format pursuant to
General Instruction H to Form 10-Q.  In addition, this Item
updates, and should be read in conjunction with the information disclosed in our
2008 Annual Report on Form 10-K, and our condensed consolidated financial
statements and the accompanying footnotes presented in Item 1 of this
Quarterly Report on Form 10-Q.




Results
of Operations




Our management uses
earnings before interest expense and income taxes (EBIT) as a measure to assess
the operating results and effectiveness of our business, which consists of
consolidated operations as well as an investment in an unconsolidated affiliate.
We believe EBIT is useful to investors because it allows them to evaluate more
effectively our operating performance using the same performance measure
analyzed internally by our management. We define EBIT as net income adjusted for
(i) items that do not impact our income from continuing operations, (ii) income
taxes, (iii) interest and debt expense and (iv) affiliated interest income. We
exclude interest and debt expense from this measure so that investors may
evaluate our operating results without regard to our financing methods. EBIT may
not be comparable to measurements used by other companies. Additionally, EBIT
should be considered in conjunction with net income and other performance
measures such as operating income or operating cash flows.  Below is a
reconciliation of our EBIT to net income, our throughput volumes and an analysis
and discussion of  our results for the quarter ended March 31, 2009
compared with the same period in 2008.





Operating
Results:


2009
            
            
            2008(In
      millions,
              except
      for volumes)Operating
      revenues
            
            $
            266
            
            
            $
            245Operating
      expenses
            
            
            (152
            )
            
            
            (157
            )Operating
      income
            
            
            114
            
            
            
            88Earnings from
      unconsolidated affiliate
            
            
            3
            
            
            
            4Other income,
      net
            
            
            3
            
            
            
            4EBIT
            
            
            120
            
            
            
            96Interest and
      debt expense
            
            
            (38
            )
            
            
            (33
            )Affiliated
      interest income, net
            
            
            4
            
            
            
            9Income
      taxes
            
            
            (33
            )
            
            
            (29
            )Net
      income
            
            $
            53
            
            
            $
            43Throughput
      volumes (BBtu/d)
            
            
            5,497
            
            
            
            5,743




EBIT
Analysis:


Revenue
            
            
            Expense
            
            
            Other
            
            
            EBIT
              ImpactFavorable/(Unfavorable)(In
      millions)Gas not used
      in operations and other natural gas sales
            
            $
            18
            
            
            $
            (2
            )
            
            $
            —
            
            
            $
            16Services
      revenues
            
            
            4
            
            
            
            —
            
            
            
            —
            
            
            
            4Hurricanes
            
            
            —
            
            
            
            (4
            )
            
            
            —
            
            
            
            (4
            )Other
      operating and general and administrative costs
            
            
            —
            
            
            
            (4
            )
            
            
            —
            
            
            
            (4
            )Loss on
      long-lived assets
            
            
            —
            
            
            
            16
            
            
            
            —
            
            
            
            16Other(1)
            
            
            (1
            )
            
            
            (1
            )
            
            
            (2
            )
            
            
            (4
            )Total
      impact on EBIT
            
            $
            21
            
            
            $
            5
            
            
            $
            (2
            )
            
            $
            24


_______________


(1)
      Consists of individually insignificant
  items.





Gas
Not Used in Operations and Other Natural Gas Sales.Gas not
used in operations results in revenues to us, which we recognize when volumes
are retained.  During the quarter ended March 31, 2009, our EBIT was
favorably impacted by higher average prices realized on operational sales of gas
not used in our system as compared to the same period in 2008.  For a
further discussion of gas not used in operations and other natural gas sales,
see our 2008 Annual Report on Form 10-K.




9


Services
Revenues.During the quarter ended March 31, 2009, our EBIT
was favorably impacted by higher average realized rates in the northern region
and additional capacity sales in the southern region of our system, as compared
to the same period in 2008.




Hurricanes.We continue to repair damages to sections of our Gulf Coast and offshore
pipeline facilities due to Hurricanes Gustav and Ike which occurred during the
third quarter of 2008. For the quarter ended March 31, 2009, our EBIT was
unfavorably impacted by $4 million related to these hurricanes due to repair
costs that will not be recovered from insurance due to losses not exceeding
self-retention levels.




Other
Operating and General and Administrative Costs.During the quarter ended
March 31, 2009, our operating and general and administrative expenses were
higher than the same period in 2008 primarily due to increased labor costs to
support customer activities.




Loss
on Long-Lived Assets.In the first quarter of 2008, we recorded
impairments of $16 million, primarily related to our decision not to proceed
with the Essex-Middlesex Lateral project due to its prolonged permitting process
and changing market conditions.




Interest
and Debt Expense




Interest and debt
expense for the quarter ended March 31, 2009 was approximately $5 million higher
than the same period in 2008 primarily due to the issuance of $250 million of
8.00% senior notes in January 2009.




Affiliated
Interest Income, Net




Affiliated interest
income, net for the quarter ended March 31, 2009, was $5 million lower than the
same period in 2008 primarily due to lower average short-term interest rates on
advances to El Paso under its cash management program.  The following
table shows the average advances due from El Paso and the average short-term
interest rates for the quarters ended March 31:





2009
            
            
            2008(In
      millions, except for rates)Average
      advance due from El Paso
            
            $
            818
            
            
            $
            705Average
      short-term interest rate
            
            
            2.2
            %
            
            
            5.6
            %




Income
Taxes




Our effective tax
rates of 38 percent and 40 percent for the quarters ended March 31, 2009 and
2008 were higher than the statutory rate of 35 percent primarily due to the
effect of state income taxes.


























10





Liquidity
and Capital Resources






Liquidity
Overview. Our primary sources of liquidity are cash on hand, cash flows
from operating activities and El Paso’s cash management program. Our primary
uses of cash are for working capital and capital expenditures. We have
historically advanced cash to El Paso under its cash management program, which
we reflect in investing activities in our statement of cash flows. At March 31,
2009, we had notes receivable from El Paso of approximately $917
million.  We do not intend to settle these notes within twelve months
and therefore, classified them as non-current on our balance sheet. See Item 1,
Financial Statements, Note 5, for a further discussion of El Paso’s cash
management program and our other affiliate notes receivable. We believe that
cash on hand and  cash flows from operating activities combined with
amounts available to us under El Paso’s cash management program will be adequate
to meet our capital requirements and our existing operating
needs.




In addition to the
cash management program, we are eligible to borrow amounts available under El
Paso’s  $1.5 billion credit agreement and are only liable for amounts
we directly borrow. As of March 31, 2009, El Paso had approximately $0.9 billion
of capacity remaining and available to us under this credit facility agreement,
and none of the amount outstanding under the facility was issued or borrowed by
us.  For a further discussion of this credit agreement, see our 2008
Annual Report on Form 10-K.




Extreme volatility in the financial
markets, the energy industry and the global economy will likely continue through
the remainder of 2009 and possibly beyond.  The global financial
markets remain extremely volatile and it is uncertain whether recent U.S.
and foreign government actions will successfully restore confidence and
liquidity in the global financial markets.  This could impact our
longer-term access to capital for future growth projects as well as the cost of
such capital. In January 2009, we issued $250 million of 8.00% senior notes due
February 2016 for net proceeds of $235 million. Based on the liquidity available
to us through cash on hand, our operating activities and El Paso’s cash
management program, we do not anticipate a need to further access the financial
markets for the remainder of 2009 for any of our operating activities or
expansion capital needs. Additionally, although the impacts are difficult to
quantify at this point, a continued downward trend in the global economy could
have adverse impacts on natural gas consumption and demand. However, we believe
our exposure to changes in natural gas consumption and demand is largely
mitigated by a revenue base that is significantly comprised of long-term
contracts that are based on firm demand charges and are less affected by a
potential reduction in the actual usage or consumption of natural gas.




As of March 31,
2009, El Paso had approximately $1.8 billion of cash and approximately $1.5
billion of capacity available to it under various committed credit
facilities.  As noted above, we do not currently anticipate a need to
further access the financial markets for the remainder of
2009; however, volatility in the financial markets could impact our or
El Paso’s ability to access these markets at reasonable rates in the
future.




Capital
Expenditures.Our cash capital expenditures for the quarter ended March
31, 2009, and our estimates of capital expenditures for the remainder of this
year to expand and maintain our system are listed below. We expect to fund these
capital expenditures through a combination of available cash on hand, internally
generated funds, and amounts available under El Paso’s cash management
program.





Quarter
      Ended
              March 31, 2009
            
            
            2009
              Remaining
            
            
            Total(In
      millions)Maintenance
            
            $
            23
            
            
            $
            154
            
            
            $
            177Expansion
            
            
            18
            
            
            
            130
            
            
            
            148Hurricanes
            
            
            16
            
            
            
            29
            
            
            
            45Other (1)
            
            
            10
            
            
            
            72
            
            
            
            82$
            67
            
            
            $
            385
            
            
            $
            452


____________


(1)
Relates to building renovations at our corporate facilities.







11










Commitments
and Contingencies




See Item 1,
Financial Statements, Note 4, which is incorporated herein by
reference.




Item
3. Quantitative and Qualitative Disclosures About Market Risk




Omitted from this
report pursuant to the reduced disclosure format permitted by General
Instruction H to Form 10-Q.




















































12








Item 4. Controls
and Procedures




Evaluation
of Disclosure Controls and Procedures




As of March 31,
2009, we carried out an evaluation under the supervision and with the
participation of our management, including our President and our Chief Financial
Officer, as to the effectiveness, design and operation of our disclosure
controls and procedures. This evaluation considered the various processes
carried out under the direction of our disclosure committee in an effort to
ensure that information required to be disclosed in the SEC reports we file or
submit under the Exchange Act is accurate, complete and timely. Our management,
including our President and our Chief Financial Officer, does not expect that
our disclosure controls and procedures or our internal controls will prevent
and/or detect all errors and all fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. Further, the design of a
control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because of
the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within our company have been detected. Our disclosure controls and
procedures are designed to provide reasonable assurance of achieving their
objectives and our President and our Chief Financial Officer have concluded that
our disclosure controls and procedures are effective at a reasonable level of
assurance at March 31, 2009.




Changes
in Internal Control Over Financial Reporting




There were no
changes in our internal control over financial reporting during the first
quarter of 2009 that have materially affected or are reasonably likely to
materially affect our internal control over financial reporting.


















































13





PART
II — OTHER INFORMATION




Item 1. Legal
Proceedings




See Part I,
Item 1, Financial Statements, Note 4, which is incorporated herein by
reference.




Item 1A. Risk
Factors




CAUTIONARY
STATEMENTS FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF


THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995




This report
contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are based on
assumptions or beliefs that we believe to be reasonable; however, assumed facts
almost always vary from actual results, and differences between assumed facts
and actual results can be material, depending upon the circumstances. Where,
based on assumptions, we or our management express an expectation or belief as
to future results, that expectation or belief is expressed in good faith and is
believed to have a reasonable basis. We cannot assure you, however, that the
stated expectation or belief will occur, be achieved or accomplished. The words
“believe,” “expect,” “estimate,” “anticipate,” and similar expressions will
generally identify forward-looking statements. All of our forward-looking
statements, whether written or oral, are expressly qualified by these cautionary
statements and any other cautionary statements that may accompany such
forward-looking statements. In addition, we disclaim any obligation to update
any forward-looking statements to reflect events or circumstances after the date
of this report.




Important factors
that could cause actual results to differ materially from estimates or
projections contained in forward-looking statements are described in our 2008
Annual Report on Form 10-K under Part I, item 1A, Risk Factors. There have
been no material changes in these risk factors since that report.




Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds




Omitted from this
report pursuant to the reduced disclosure format permitted by General
Instruction H to Form 10-Q.




Item 3. Defaults
Upon Senior Securities




Omitted from this
report pursuant to the reduced disclosure format permitted by General
Instruction H to Form 10-Q.




Item 4. Submission
of Matters to a Vote of Security Holders




Omitted from this
report pursuant to the reduced disclosure format permitted by General
Instruction H to Form 10-Q.




Item 5. Other
Information




None.














14








Item 6. Exhibits





The
Exhibit Index is hereby incorporated herein by reference and sets forth a
list of those exhibits filed herewith.





The agreements included as
exhibits to this report, are intended to provide information regarding their
terms and not to provide any other factual or disclosure information
about us or the other parties to the agreements. The agreements may contain
representations and warranties by the parties to the agreements, including us,
solely for the benefit of the other parties to the applicable agreement
and:





·
            should not in
      all instances be treated as categorical statements of fact, but rather as
      a way of allocating the risk to one of the parties if those statements
      prove to be inaccurate;


·
            may have been
      qualified by disclosures that were made to the other party in connection
      with the negotiation of the applicable agreement, which disclosures are
      not necessarily reflected in the
agreement;


·
            may apply
      standards of materiality in a way that is different from what may be
      viewed as material to certain
  investors; and


·
            were made
      only as of the date of the applicable agreement or such other date or
      dates as may be specified in the agreement and are subject to more recent
      developments.





Accordingly, these
representations and warranties may not describe the actual state of affairs as
of the date they were made or at any other time.
































15





SIGNATURES





Pursuant to the
requirements of the Securities Exchange Act of 1934, Tennessee Gas Pipeline
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


TENNESSEE GAS PIPELINE COMPANYDate:  May
      11, 2009
                /s/
      James C. YardleyJames C.
      YardleyChairman
      of the Board and President(Principal
      Executive Officer)Date:  May
      11, 2009
                /s/
      John R. SultJohn R.
      SultSenior
      Vice President,Chief
      Financial Officer and Controller(Principal
      Accounting and Financial Officer)


































16





TENNESSEE
GAS PIPELINE COMPANY





EXHIBIT
INDEX




Each exhibit
identified below is filed as part of this report. Exhibits filed with this
report are designated by “*”. All exhibits not so designatedare incorporated
herein by reference to a prior filing as indicated.


Exhibit
                Number
              Description4
              Sixth
      Supplemental Indenture dated as of January 27, 2009 between Tennessee Gas
      Pipeline Company and Wilmington Trust Company, as trustee, to indenture
      dated as of March 4, 1997 (Exhibit 4.A to our Current Report on Form 8-K
      filed with the SEC on January 29, 2009).*12
              Ratio of
      Earnings to Fixed Charges.*31.A
              Certification
      of Principal Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.*31.B
              Certification
      of Chief Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.*32.A
              Certification
      of Principal Executive Officer pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.*32.B
              Certification
      of Chief Financial Officer pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.












































17