##### Table of Contents



As filed with the Securities and Exchange Commission on
    May 8, 2007
 
 
 Registration
    No. 333-141687
 
 
   UNITED STATES SECURITIES
    AND EXCHANGE COMMISSION
  Washington, D.C.
    20549
    
   Amendment No. 1
    to
 
 Form S-1
 REGISTRATION
    STATEMENT
 UNDER
 THE SECURITIES ACT OF
    1933
      SPECTRA ENERGY PARTNERS,
    LP
 (Exact Name of Registrant as
    Specified in Its Charter)
      Delaware

4922

41-2232463(State or Other Jurisdiction
    of
    Incorporation or Organization)

(Primary Standard Industrial
    Classification Code Number)

(I.R.S. Employer
    Identification Number)   5400 Westheimer Court
 Houston, Texas 77056
 (713) 627-5400
 (Address, Including Zip Code,
    and Telephone Number,
 Including Area Code, of
    Registrants Principal Executive Offices)
  C. Gregory Harper
 President and Chief Executive Officer
 5400 Westheimer Court
 Houston, Texas 77056
 (713) 627-5400
 (Name, Address, Including Zip
    Code, and Telephone Number,
 Including Area Code, of Agent
    for Service)
      Copies to:
  David P. Oelman
    Vinson & Elkins L.L.P.
    1001 Fannin Street, Suite 2500
    Houston, Texas 77002
    (713) 758-2222

Joshua Davidson
    Kelly B. Rose
    Baker Botts L.L.P.
    910 Louisiana Street
    Houston, Texas 77002
    (713) 229-1234       Approximate date of commencement of proposed sale to the
    public:
  o
  o
  o
  o
  o
 
 
  The registrant hereby amends this registration statement on
    such date or dates as may be necessary to delay its effective
    date until the registrant shall file a further amendment which
    specifically states that this registration statement shall
    thereafter become effective in accordance with Section 8(a)
    of the Securities Act of 1933 or until the registration
    statement shall become effective on such date as the Securities
    and Exchange Commission, acting pursuant to said
    Section 8(a), may determine.




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##### Table of Contents



The
information in this preliminary prospectus is not complete and
may be changed. These securities may not be sold until the
registration statement filed with the Securities and Exchange
Commission is effective. This preliminary prospectus is not an
offer to sell nor does it seek an offer to buy these securities
in any jurisdiction where the offer or sale is not permitted.   SUBJECT
    TO COMPLETION DATED MAY 8, 2007
 
  PROSPECTUS
 
  11,500,000 Common
    Units
 Representing Limited Partner
    Interests
 
   
 
  Investing in our common units involves risks. Please read
    Risk Factors beginning on page 20.
 
    
    We may not have sufficient cash from operations following the
    establishment of cash reserves and payment of fees and expenses,
    including cost reimbursements to our general partner, to enable
    us to make cash distributions to holders of our common units and
    subordinated units at the initial distribution rate under our
    cash distribution policy.
    Two of our three primary assets are controlled by Spectra Energy
    Corp and other third parties who are responsible for their
    management and operations. As a result we cannot control the
    amount of cash we will receive from them and we may be required
    to contribute significant cash to fund their operations.
    Our natural gas transportation and storage operations are
    subject to regulation by the Federal Energy Regulatory
    Commission, which could have an adverse impact on our ability to
    establish transportation and storage rates that would allow us
    to recover the full cost of operating our pipelines, including a
    reasonable return, and our ability to make distributions to you.
    Spectra Energy Corp controls our general partner, which has sole
    responsibility for conducting our business and managing our
    operations. Our general partner and its affiliates, including
    Spectra Energy Corp, have conflicts of interest with us and
    limited fiduciary duties, and they may favor their own interests
    to your detriment.
    Affiliates of our general partner, including Spectra Energy
    Corp, DCP Midstream, LLC and DCP Midstream Partners, LP, are not
    limited in their ability to compete with us, which could limit
    our commercial activities or our ability to acquire additional
    assets or businesses.
    If you are not an (1) individual or entity subject to
    U.S. federal income taxation on the income generated by us
    or (2) entity not subject to U.S. federal taxation on
    the income generated by us, but all of whose owners are subject
    to such taxation, you will not be entitled to receive
    distributions or allocations of income or loss on your common
    units and your common units will be subject to redemption.
    Holders of our common units have limited voting rights and are
    not entitled to elect our general partner or its directors.
    You will experience immediate and substantial dilution of $6.43
    in tangible net book value per common unit.
    You may be required to pay taxes on income from us even if you
    do not receive any cash distributions from us.  Per Common Unit

TotalInitial public offering price

$



$Underwriting discount(1)

$



$Proceeds to Spectra Energy
    Partners, LP (before expenses)

$



$    
  (1)
    
    Excludes an aggregate structuring
    fee equal to 0.25% of the gross proceeds of this offering, or
    approximately $575,000,  payable to Citigroup Global Markets
    Inc. and Lehman Brothers Inc. 
  30-day
     
  Citi
    Lehman
    Brothers 
 
 Merrill Lynch &
    Co. UBS Investment Bank Wachovia Securities 
 
 A.G. Edwards
    Raymond
    James 
  ,
    2007




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TABLE OF
    CONTENTS
 
 SUMMARY


1Spectra Energy
    Partners, LP


1Our Relationship
    with Spectra Energy


2Summary of Risk
    Factors


3Formation
    Transactions and Partnership Structure


5Management of
    Spectra Energy Parners, LP


5Organizational
    Structure and Ownership


6Principal Executive
    Offices and Internet Address


7Summary of
    Conflicts of Interest and Fiduciary Duties


7The
    Offering


8Summary Historical
    and Pro Forma Financial and Operating Data


13Non-GAAP Financial
    Measures


16RISK
    FACTORS


20Risks Related to
    Our Business


20Risks Inherent in
    an Investment in Us


32Tax Risks to Common
    Unitholders


40USE OF
    PROCEEDS


43CAPITALIZATION


44DILUTION


45OUR CASH
    DISTRIBUTION POLICY AND RESTRICTIONS ON DISTRIBUTIONS


46General


46Our Initial
    Distribution Rate


48Unaudited Pro Forma
    Cash Available for Distribution for the Year Ended
    December 31, 2006


50Minimum Estimated
    Cash Available for Distribution for the Twelve-Month Period
    Ending June 30, 2008


53Assumptions and
    Considerations


57PROVISIONS OF OUR
    PARTNERSHIP AGREEMENT RELATING TO CASH DISTRIBUTIONS


63Distributions of
    Available Cash


63Operating Surplus
    and Capital Surplus


64Subordination
    Period


65Distributions of
    Available Cash from Operating Surplus during the Subordination
    Period


66Distributions of
    Available Cash from Operating Surplus after the Subordination
    Period


67General Partner
    Interest and Incentive Distribution Rights


67Percentage
    Allocations of Available Cash from Operating Surplus


68General
    Partners Right to Reset Incentive Distribution
    Levels


68Distributions from
    Capital Surplus


70Adjustment to the
    Minimum Quarterly Distribution and Target Distribution
    Levels


71Distributions of
    Cash Upon Liquidation


72SELECTED HISTORICAL
    AND PRO FORMA FINANCIAL AND OPERATING DATA


74Non-GAAP Financial
    Measures


77MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS


81Overview


81Our Organic Growth
    Initiatives


81Factors that Impact
    our Business


82How We Evaluate Our
    Operations


83Results of
    Operations


86Future Trends and
    Outlook


90 
 i




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Liquidity and
    Capital Resources


91Off Balance Sheet
    Arrangements


93Capital
    Requirements


93Quantitative and
    Qualitative Disclosures About Market Risk


96Critical Accounting
    Policies and Estimates


96New Accounting
    Standards


98BUSINESS


99Business
    Strategies


100Competitive
    Strengths


101Our Relationship
    with Spectra Energy


103Natural Gas
    Industry Overview


103Our Asset
    Portfolio


107Safety and
    Maintenance


115Regulation


116Seasonality


119Environmental
    Regulation


119Title to Properties
    and
    Rights-of-Way


122Insurance


122Facilities


122Employees


123Legal
    Proceedings


123MANAGEMENT


124Management of
    Spectra Energy Partners, LP


124Directors and
    Executive Officers


125Reimbursement of
    Expenses of Our General Partner


125Executive
    Compensation


126Compensation
    Discussion and Analysis


126Compensation of
    Directors


127Long-Term Incentive
    Plan


128SECURITY OWNERSHIP
    OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


130CERTAIN
    RELATIONSHIPS AND RELATED PARTY TRANSACTIONS


131Distributions and
    Payments to Our General Partner and its Affiliates


131Agreements
    Governing the Transactions


132Omnibus
    Agreement


132Contracts with
    Affiliates


133CONFLICTS OF
    INTEREST AND FIDUCIARY DUTIES


135Conflicts of
    Interest


135Fiduciary
    Duties


140DESCRIPTION OF THE
    COMMON UNITS


143The Units


143Transfer Agent and
    Registrar


143Transfer of Common
    Units


143THE PARTNERSHIP
    AGREEMENT


145Organization and
    Duration


145Purpose


145Power of
    Attorney


145Cash
    Distributions


145Capital
    Contributions


145 
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Voting
    Rights


146Limited
    Liability


147Issuance of
    Additional Securities


148Amendment of the
    Partnership Agreement


148Merger,
    Consolidation, Conversion, Sale or Other Disposition of
    Assets


150Termination and
    Dissolution


151Liquidation and
    Distribution of Proceeds


151Withdrawal or
    Removal of the General Partner


152Transfer of General
    Partner Units


153Transfer of
    Ownership Interests in the General Partner


153Transfer of
    Incentive Distribution Rights


153Change of
    Management Provisions


153Limited Call
    Right


154Non-Taxpaying
    Assignees; Redemption


154Meetings;
    Voting


155Status as Limited
    Partner


156Non-Citizen
    Assignees; Redemption


156Indemnification


156Reimbursement of
    Expenses


156Books and
    Reports


157Right to Inspect
    Our Books and Records


157Registration
    Rights


157UNITS ELIGIBLE FOR
    FUTURE SALE


158MATERIAL TAX
    CONSEQUENCES


159Partnership
    Status


159Limited Partner
    Status


160Tax Consequences of
    Unit Ownership


161Tax Treatment of
    Operations


162Disposition of
    Common Units


167Uniformity of
    Units


169Tax-Exempt
    Organizations and Other Investors


170Administrative
    Matters


170State, Local,
    Foreign and Other Tax Considerations


172SELLING
    UNITHOLDER


174INVESTMENT IN
    SPECTRA ENERGY PARTNERS, LP BY EMPLOYEE BENEFIT PLANS


175UNDERWRITING


176VALIDITY OF THE
    COMMON UNITS


178EXPERTS


178WHERE YOU CAN FIND
    MORE INFORMATION


179FORWARD-LOOKING
    STATEMENTS


179INDEX TO FINANCIAL
    STATEMENTS


F-1APPENDIX A  FORM
    OF FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
    OF SPECTRA ENERGY PARTNERS, LP


A-1APPENDIX B 
    APPLICATION FOR TRANSFER OF COMMON UNITS


B-1APPENDIX C 
    CERTIFICATION FORM FOR NON-INDIVIDUAL INVESTORS


C-1APPENDIX D 
    GLOSSARY OF TERMS


D-1Consent of Deloitte & Touche LLPConsent of Deloitte & Touche LLPConsent of Deloitte & Touche LLP  
 iii




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iv




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SUMMARY  This summary provides a brief overview of information
    contained elsewhere in this prospectus. You should read the
    entire prospectus carefully, including Risk Factors
    beginning on page 22 and the historical and pro forma
    financial statements. Unless indicated otherwise, the
    information presented in this prospectus assumes (1) an
    initial public offering price of $20.00 per unit and
    (2) that the underwriters do not exercise their option to
    purchase additional units. We include a glossary of some of the
    terms used in this prospectus as Appendix D. References in
    this prospectus to Spectra Energy Partners, LP,
    we, our, us or like terms
    when used in a historical context refer to the businesses that
    Spectra Energy Corp is contributing to Spectra Energy Partners,
    LP in connection with this offering. When used in the present
    tense or prospectively, those terms refer to Spectra Energy
    Partners, LP and its subsidiaries. References to our
    general partner refer to Spectra Energy Partners
    (DE) GP, LP
    and/or
    Spectra Energy Partners GP, LLC, the general partner of Spectra
    Energy Partners (DE) GP, LP, as appropriate. References to
    Spectra Energy when used with respect to periods
    prior to January 1, 2007 refer to Spectra Energy Capital,
    LLC and when used with respect to periods after that date or
    prospectively refer to Spectra Energy Corp, the ultimate parent
    company of our general partner. References to East
    Tennessee, Gulfstream or Market
    Hub refer to East Tennessee Natural Gas, LLC, Gulfstream
    Natural Gas System, L.L.C. or Market Hub Partners Holding, LLC,
    respectively.
 Spectra
    Energy Partners, LP  Overview
 
   
    Our
    Assets
 
  East Tennessee System. 1,400-mile
 
  Gulfstream System. 690-mile
 1




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##### Table of Contents



Market Hub System.
  Our
    Operations
      WeightedRevenue Composition %


% of Physical


AverageFirm Contracts





Capacity


RemainingCapacity








Subscribed


ContractOur Ownership


Reservation


Variable


Interruptible


Under Firm


Life (inAsset

Interest


Fees


Fees


Contracts


Contracts


years)(1)East Tennessee


100.0
%


97.7
%


1.7
%


0.6
%


89.7
%


9.3Gulfstream


24.5
%


85.6
%


2.9
%


11.5
%


68.8
%


20.2Market Hub


50.0
%


90.0
%


0.0
%


10.0
%


100.0
%


2.4     (1)
    
    The average life of each contract is calculated based on the
    average annual contract revenue for such contracts
    remaining life.   
 Our
    Relationship with Spectra Energy
 2




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Summary
    of Risk Factors    Risks
    Related to Our Business
  
    We may not have sufficient cash from operations following the
    establishment of cash reserves and payment of fees and expenses,
    including cost reimbursements to our general partner, to enable
    us to make cash distributions to holders of our common units and
    subordinated units at the initial distribution rate under our
    cash distribution policy.
    On a pro forma basis we would not have had sufficient cash
    available for distribution to pay the full minimum quarterly
    distribution on all units for the year ended December 31,
    2006. Please read Our Cash Distribution Policy and
    Restrictions on Distributions.
    Gulfstream and Market Hub are controlled by Spectra Energy and
    other third parties who are responsible for their management and
    operations. As a result we cannot control the amount of cash we
    will receive from Gulfstream and Market Hub and we may be
    required to contribute significant cash to fund their operations.
    Our natural gas transportation and storage operations are
    subject to regulation by FERC, which could have an adverse
    impact on our ability to establish transportation and storage
    rates that would allow us to recover the full cost of operating
    our pipelines, including a reasonable return, and our ability to
    make distributions to you. 
  
    Certain of our transportation services are subject to long-term,
    fixed-price negotiated rate contracts that are not
    subject to adjustment, even if our cost to perform such services
    exceeds the revenues received from such contracts, and, as a
    result, our costs could exceed our revenues received under such
    contracts. 
  
    The assumptions underlying the minimum estimated cash available
    for distribution we include in Our Cash Distribution
    Policy and Restrictions on Distributions are inherently
    uncertain and are
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subject to significant business, economic, financial, regulatory
    and competitive risks and uncertainties that could cause actual
    results to differ materially from those estimated.  
    If third-party pipelines and other facilities interconnected to
    our natural gas pipelines and facilities become unavailable to
    transport natural gas, our revenues and cash available for
    distribution could be adversely affected. 
  
    Any significant decrease in supplies of natural gas in our areas
    of operation could adversely affect our business and operating
    results and reduce our cash available for distribution to
    unitholders. 
  
    We may not be able to maintain or replace expiring gas
    transportation and storage contracts at favorable rates.
    We depend on certain key customers for a significant portion of
    our revenues. The loss of any of these key customers could
    result in a decline in our revenues and cash available to make
    distributions to you.  Risks
    Inherent in an Investment in Us
  
    Spectra Energy controls our general partner, which has sole
    responsibility for conducting our business and managing our
    operations. Spectra Energy has conflicts of interest, and it may
    favor its own interests to your detriment.
    Affiliates of our general partner, including Spectra Energy, DCP
    Midstream, LLC and DCP Midstream Partners, LP, are not limited
    in their ability to compete with us, which could limit our
    commercial activities or our ability to acquire additional
    assets or businesses.
    If you are not an (1) individual or entity subject to
    U.S. federal income taxation on the income generated by us
    or (2) entity not subject to U.S. federal taxation on
    the income generated by us, but all of whose owners are subject
    to such taxation, you will not be entitled to receive
    distributions or allocations of income or loss on your common
    units and your common units will be subject to redemption.
    Cost reimbursements to our general partner and its affiliates
    for services provided, which will be determined by our general
    partner, will be substantial and will reduce our cash available
    for distribution to you.
    Our partnership agreement limits our general partners
    fiduciary duties to holders of our common units and subordinated
    units and restricts the remedies available to holders of our
    common units and subordinated units for actions taken by our
    general partner that might otherwise constitute breaches of
    fiduciary duty.  Tax
    Risks to Common Unitholders
  
    Our tax treatment depends on our status as a partnership for
    federal income tax purposes, as well as our not being subject to
    entity-level taxation by individual states. If the Internal
    Revenue Service treats us as a corporation or we become subject
    to entity-level taxation for state tax purposes, it would
    substantially reduce the amount of cash available for
    distribution to our unitholders.
    An Internal Revenue Service contest of the federal income tax
    positions we take may adversely affect the market for our common
    units, and the cost of any Internal Revenue Service contest will
    reduce our cash available for distribution to our unitholders.
    You may be required to pay taxes on income from us even if you
    do not receive any cash distributions from us.
    Tax gain or loss on disposition of common units could be more or
    less than expected.
 4




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Formation
    Transactions and Partnership Structure  General
    
    Spectra Energy or its subsidiaries will contribute certain of
    their assets to us or our subsidiaries;
    we will issue to a subsidiary of Spectra Energy 29,812,011
    common units and 20,030,066 subordinated units, representing an
    aggregate 79.6% limited partner interest in us;
    we will issue to Spectra Energy Partners (DE) GP, LP, a
    subsidiary of Spectra Energy, a 2% general partner interest in
    us and all of our incentive distribution rights, which will
    entitle our general partner to increasing percentages of the
    cash we distribute in excess of $0.3738 per unit per
    quarter (115% of the minimum quarterly distribution);
    we will issue 11,500,000 common units to the public in this
    offering, representing an 18.4% limited partner interest in us,
    and will use the proceeds as described in Use of
    Proceeds; 
  
    we will enter into a new $500 million credit facility under
    which we expect to borrow $200 million in term debt and
    $125 million in revolving debt; and 
  
    we will enter into an omnibus agreement with Spectra Energy, our
    general partner and certain of their affiliates pursuant to
    which:  
    we will reimburse Spectra Energy for the payment of certain
    operating expenses and for providing various general and
    administrative services; and
    Spectra Energy will indemnify us for certain environmental and
    tax liabilities and title and
    right-of-way
    defects. Management
    of Spectra Energy Partners, LP
 5




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Organizational
    Structure and Ownership    Public Common Units


18.4
%Spectra Energy Common and
    Subordinated Units


79.6
%General Partner Units


2.0
%Total


100.0
%
 6




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Principal
    Executive Offices and Internet Address  (713) 627-5400.
 
 Summary
    of Conflicts of Interest and Fiduciary Duties  General.
  Partnership Agreement Modifications to Fiduciary
    Duties.
 7




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The
    Offering  Common units offered to the public
    
    11,500,000 common units. 
  Common units subject to the underwriters option to
    purchase additional common units
    
    If the underwriters exercise their option to purchase additional
    units in full, we will issue 1,725,000 additional common units
    to the public and redeem the same number of common units from
    our general partner, which will be deemed to be a selling
    unitholder in this offering. Please read Selling
    Unitholder. 
  Units outstanding after this offering
    
    41,312,011 common units and 20,030,066 subordinated units,
    representing 66% and 32%, respectively, limited partner
    interests in us. The general partner will own 1,251,879 general
    partner units. 
  Use of proceeds
    
    We intend to use the net proceeds of approximately
    $215.6 million from this offering, after deducting
    underwriting discounts and structuring fees of $575,000, to be
    paid to Citigroup Global Markets Inc. and Lehman Brothers Inc.
    for evaluation, analysis and structuring of our partnership, but
    before paying offering expenses to: 
 
   purchase approximately $200 million of United
    States Treasury and other qualifying securities, which will be
    assigned as collateral to secure the term loan portion of our
    credit facility; 
 
   pay approximately $6.9 million of expenses
    associated with the offering and related formation transactions;
    and 
 
   use the remaining amount of approximately
    $8.7 million to fund working capital. 
 
  We also anticipate that we will borrow approximately
    $200 million in term debt and approximately
    $125 million in revolving debt upon the closing of this
    offering, and we will distribute the aggregate amount of the
    proceeds of such borrowings to subsidiaries of Spectra Energy,
    which distribution will be made in partial consideration of the
    assets contributed to us upon the closing of this offering. 
  If the underwriters option to purchase additional common
    units is exercised in full, we will (1) use the net
    proceeds of $32.3 million to purchase an equivalent amount
    of United States Treasury and other qualifying securities, which
    will be assigned as collateral to secure the additional term
    loan borrowings described below and (2) borrow an
    additional amount under the term loan portion of our credit
    facility equal to the net proceeds to be received from the
    exercise of the underwriters option. The proceeds of the
    additional term loan borrowings will be used to redeem from a
    subsidiary of Spectra Energy a number of common units equal to
    the number of common units issued upon exercise of the
    underwriters option, at a price per common unit equal to
    the proceeds per common unit before expenses but after
    underwriting discounts and a structuring fee.Cash distributions
    
    We will make an initial quarterly distribution of
    $0.325 per common unit ($1.30 per common unit on an
    annualized basis) to the extent we have sufficient cash from
    operations after establishment of cash reserves and payment of
    fees and expenses, including
 8




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payments to our general partner and its affiliates. Our ability
    to pay cash distributions at this initial distribution rate is
    subject to various restrictions and other factors described in
    more detail under the caption Our Cash Distribution Policy
    and Restrictions on Distributions.We will pay investors in this offering a prorated distribution
    for the first quarter during which we are a publicly traded
    partnership. Such distribution will cover the period from the
    closing date of this offering to and including
    September 30, 2007. We expect to pay this cash distribution
    on or about November 15, 2007.Our partnership agreement requires us to distribute all of our
    cash on hand at the end of each quarter, less reserves
    established by our general partner. We refer to this cash as
    available cash, and we define its meaning in our
    partnership agreement and in the glossary of terms attached as
    Appendix D. Our partnership agreement also requires that we
    distribute all of our available cash from operating surplus each
    quarter in the following manner: first, 98% to the holders of common units and
    2% to our general partner, until each common unit has received a
    minimum quarterly distribution of $0.325 plus any arrearages
    from prior quarters; second, 98% to the holders of subordinated
    units and 2% to our general partner, until each subordinated
    unit has received a minimum quarterly distribution of
    $0.325; and third, 98% to all unitholders, pro rata, and
    2% to our general partner, until each unit has received a
    distribution of $0.3738.If cash distributions to our unitholders exceed $0.3738 per
    common unit in any quarter, our general partner will receive, in
    addition to distributions on its 2% general partner interest,
    increasing percentages, up to 48%, of the cash we distribute in
    excess of that amount. We refer to these distributions as
    incentive distributions. Please read
    Provisions of Our Partnership Agreement Relating to Cash
    Distributions.The amount of pro forma available cash generated during the year
    ended December 31, 2006 would have been sufficient to allow
    us to pay the full minimum quarterly distribution on all of our
    common units but only approximately 47% of the minimum quarterly
    distribution on our subordinated units during that period. For a
    calculation of our ability to make distributions to unitholders
    based on our pro forma results for 2006, please read Our
    Cash Distribution Policy and Restrictions on
    Distributions  Unaudited Pro Forma Cash Available for
    Distribution for the Year Ended December 31, 2006.We believe that, based on the estimates contained and the
    assumptions listed under the caption Our Cash Distribution
    Policy and Restrictions on Distributions  Minimum
    Estimated Cash Available for Distribution for the Twelve-Month
    Period Ending June 30, 2008, we will have sufficient
    cash available for distribution to make cash distributions for
    the four quarters
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ending June 30, 2008 at the initial distribution rate of
    $0.325 per common unit per quarter ($1.30 per common
    unit on an annualized basis) on all common units and
    subordinated units.Subordinated units
    
    A subsidiary of Spectra Energy will initially own all of our
    subordinated units. The principal difference between our common
    units and subordinated units is that in any quarter during the
    subordination period, holders of the subordinated units are
    entitled to receive the minimum quarterly distribution of $0.325
    per unit only after the common units have received the minimum
    quarterly distribution plus any arrearages in the payment of the
    minimum quarterly distribution from prior quarters. Subordinated
    units will not accrue arrearages. The subordination period will
    end on the first business day after we have earned and paid at
    least $0.325 on each outstanding limited partner unit and
    general partner unit for any three consecutive,
    non-overlapping
    four quarter periods ending on or after June 30, 2010. The
    subordination period also will end upon the removal of our
    general partner other than for cause if the units held by our
    general partner and its affiliates are not voted in favor of
    such removal.When the subordination period ends, all remaining subordinated
    units will convert into common units on a
    one-for-one
    basis, and the common units will no longer be entitled to
    arrearages. Please read Provisions of Our Partnership
    Agreement Related to Cash Distributions 
    Subordination Period.Early conversion of subordinated units
    
    Alternatively, the subordination period will end on the first
    business day after we have earned and paid at least $1.95 (150%
    of the annualized minimum quarterly distribution) on each
    outstanding limited partner unit and general partner unit for
    any four quarter period ending on or after June 30, 2008.
    Please read Provisions of Our Partnership Agreement
    Related to Cash Distributions  Subordination
    Period.General Partners right to reset the target distribution
    levels
    
    Our general partner has the right, at a time when there are no
    subordinated units outstanding and it has received incentive
    distributions at the highest level to which it is entitled (48%)
    for each of the prior four consecutive fiscal quarters, to reset
    the initial cash target distribution levels at higher levels
    based on the distribution at the time of the exercise of the
    reset election. Following a reset election by our general
    partner, the minimum quarterly distribution amount will be reset
    to an amount equal to the average cash distribution amount per
    common unit for the two fiscal quarters immediately preceding
    the reset election (such amount is referred to as the
    reset minimum quarterly distribution) and the target
    distribution levels will be reset to correspondingly higher
    levels based on the same percentage increases above the reset
    minimum quarterly distribution amount as in our current target
    distribution levels.In connection with resetting these target distribution levels,
    our general partner will be entitled to receive Class B
    units. The
 10




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##### Table of Contents



Class B units will be entitled to the same cash
    distributions per unit as our common units and will be
    convertible into an equal number of common units. The number of
    Class B units to be issued will be equal to that number of
    common units whose aggregate quarterly cash distributions
    equaled the average of the distributions to our general partner
    on the incentive distribution rights in the prior two quarters.
    For a more detailed description of our general partners
    right to reset the target distribution levels upon which the
    incentive distribution payments are based and the concurrent
    right of our general partner to receive Class B units in
    connection with this reset, please see Provisions of Our
    Partnership Agreement Related to Cash Distributions 
    General Partners Right to Reset Incentive Distribution
    Levels.Issuance of additional units
    
    We can issue an unlimited number of units without the consent of
    our unitholders. Please read Units Eligible for Future
    Sale and The Partnership Agreement 
    Issuance of Additional Securities.Limited voting rights
    
    Our general partner will manage and operate us. Unlike the
    holders of common stock in a corporation, you will have only
    limited voting rights on matters affecting our business. You
    will have no right to elect our general partner or the directors
    of its general partner on an annual or other continuing basis.
    Our general partner may not be removed except by a vote of the
    holders of at least
    662/3%
    of the outstanding units, including any units owned by our
    general partner and its affiliates, voting together as a single
    class. Upon consummation of this offering, our general partner
    and its affiliates will own an aggregate of approximately 81.3%
    of our common and subordinated units. This will give Spectra
    Energy the ability to prevent our general partners
    involuntary removal. Please read The Partnership
    Agreement  Voting Rights.Limited call right
    
    If at any time our general partner and its affiliates own more
    than 80% of the outstanding common units, our general partner
    has the right, but not the obligation, to purchase all of the
    remaining common units at a price not less than the then-current
    market price of the common units.Eligible Holders and redemption
    
    Only Eligible Holders will be entitled to receive distributions
    or be allocated income or loss from us. Eligible Holders are: individuals or entities subject to United States
    federal income taxation on the income generated by us; or entities not subject to United States federal
    taxation on the income generated by us, so long as all of the
    entitys owners are subject to such taxation.We have the right, which we may assign to any of our affiliates,
    but not the obligation, to redeem all of the common and
    subordinated units of any holder that is not an Eligible Holder
    or that has failed to certify or has falsely certified that such
    holder is an Eligible Holder. The purchase price for such
    redemption would be equal to the lower of the holders
    purchase price and the then-
 11




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##### Table of Contents



current market price of the units. The redemption price will be
    paid in cash or by delivery of a promissory note, as determined
    by our general partner.Please read Description of the Common Units 
    Transfer of Common Units and The Partnership
    Agreement  Non-Taxpaying Assignees; Redemption.Estimated ratio of taxable income to distributions
    
    We estimate that if you own the common units you purchase in
    this offering through the record date for distributions for the
    period ending December 31, 2010, you will be allocated, on
    a cumulative basis, an amount of federal taxable income for that
    period that will be     % or less of
    the cash distributed to you with respect to that period. For
    example, if you receive an annual distribution of $1.30 per
    unit, we estimate that your average allocable federal taxable
    income per year will be no more than
    $      per unit. Please read
    Material Tax Consequences  Tax Consequences of
    Unit Ownership  Ratio of Taxable Income to
    Distributions.Material tax consequences
    
    For a discussion of other material federal income tax
    consequences that may be relevant to prospective unitholders who
    are individual citizens or residents of the United States,
    please read Material Tax Consequences. 
  Exchange listing
    
    We have applied to list our common units on the New York Stock
    Exchange under the symbol SEP.
 12




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##### Table of Contents



Summary
    Historical and Pro forma Financial and Operating Data   
   
   
  
    East Tennessees and Market Hubs distribution of
    accounts receivable of $9.1 million and $12.1 million
    ($6.0 million, net to our interest), respectively, to
    Spectra Energy;
    Spectra Energy Partners receipt of $230 million in
    gross proceeds from the issuance and sale of 11,500,000 common
    units to the public; 
  
    Spectra Energy Partners borrowings under its new
    $500 million credit facility of $200 million in term
    debt and $125 million in revolving debt; and 
 
  
    Spectra Energy Partners use of proceeds and borrowings to
    pay transaction expenses and underwriting commissions, replenish
    working capital and invest in U.S. Treasury and other qualifying
    securities. 
    
    Our historical and pro forma Adjusted EBITDA;
    Adjusted EBITDA for both our 24.5% ownership interest in
    Gulfstream and our 50.0% ownership interest in Market Hub;
    Our historical and pro forma cash available for
    distribution; and
    Cash available for distribution for both our 24.5% ownership
    interest in Gulfstream and our 50.0% ownership interest in
    Market Hub.
 13




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##### Table of Contents



Spectra EnergyPartners, LPSpectra Energy Partners Predecessor


Pro FormaCombined


Year EndedYear Ended December 31,


December 31,2004


2005


2006


2006(In thousands, except per unit and operating data)Statement of Operations
    Data:Total operating revenues

$
81,716


$
80,003


$
82,609


$
82,609Operating expenses:Operations, maintenance, and other


26,081



24,648



21,831



21,831Depreciation and amortization


21,492



23,640



18,986



18,986Property and other taxes


518



5,264



4,177



4,177Total operating expenses


48,091



53,552



44,994



44,994Operating income


33,625



26,451



37,615



37,615Equity in earnings of
    unconsolidated affiliates


35,495



46,287



41,105



41,105Other income (expenses), net


1,485



528



1,765



1,765Interest income


6



24



15



10,615Interest expense


(8,258
)


(8,506
)


(8,151
)


(26,951
)Income tax expense


(9,202
)


(7,834
)


(10,741
)


(453
)Net income

$
53,151


$
56,950


$
61,608


$
63,696Net income per limited
    partners unitCommon units













$
1.30Subordinated units













$
0.45Balance Sheet Data (at period
    end):Total assets

$
1,302,974


$
1,202,772


$
1,284,582


$
1,473,465Property, plant and equipment, net


602,226



616,316



691,820



691,820Investment in unconsolidated
    affiliates


553,731



422,340



442,793



431,081Long-term debt


150,000



150,000



150,000



475,000Total parent net equity


1,024,754



895,696



989,125



967,400
 14




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##### Table of Contents



Spectra EnergyPartners, LPSpectra Energy Partners Predecessor


Pro FormaCombined


Year EndedYear Ended December 31,


December 31,2004


2005


2006


2006(In thousands, except per unit and operating data)Other Financial Data:Spectra Energy PartnersNet cash provided by operating
    activities

$
83,987



93,272


$
62,278


$
64,741Adjusted EBITDA


55,117



50,091



56,601



56,601Incremental general and
    administrative expense of being a publicly-traded partnership














5,500
(b)Net cash paid for interest expense


12,955



8,566



8,591



16,591Maintenance capital expenditures


6,679



8,232



10,933



10,933Cash available for distribution(a)


73,784



77,526



80,377



66,877Expansion capital expenditures


27,590



51,083



74,977



74,977Gulfstream  our 24.5%Net cash provided by operating
    activities


18,771



24,999



24,712Adjusted EBITDA


18,699



29,583



36,060Net cash paid for interest expense


1,555



3,869



12,109Maintenance capital expenditures


47



234



151Cash available for distribution(a)


17,097



25,480



23,800Expansion capital expenditures


30,356



15,000



5,149Market Hub  our 50.0%Net cash provided by operating
    activities


21,452



31,139



84,386Adjusted EBITDA


27,027



32,552



24,286Net cash paid for interest expense










22Maintenance capital expenditures


5,823



13,799



4,763Cash available for distribution(a)


21,204



18,753



19,500Expansion capital expenditures


2,677



5,195



22,279Operating Data:East TennesseeTransportation capacity (Bcf/d)


1.263



1.280



1.319Contracted firm capacity (Bcf/d)


1.147



1.114



1.183Transported volumes (Bcf)


121.7



133.1



143.7Gulfstream  100%
    basisTransportation capacity (Bcf/d)


1.063



1.063



1.063Contracted firm capacity (Bcf/d)


0.296



0.731



0.731Transported volumes (Bcf)


110.7



179.7



251.3Market Hub  100%
    basisStorage capacity (Bcf)


28.7



29.8



34.8  
   (a)
    
    Cash available for distribution of
    Spectra Energy Partners includes cash available for distribution
    from Gulfstream and Market Hub.(b)
    
    Upon completion of this offering,
    we anticipate incurring incremental general and administrative
    expense of approximately $5.5 million per year as a result
    of being a publicly-traded limited partnership. The unaudited
    pro forma combined financial statements do not reflect
    these expenses.
 15




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##### Table of Contents



Non-GAAP Financial
    Measures   
 
   
        
    the financial performance of our assets without regard to
    financing methods, capital structure or historical cost basis;
    the ability of our assets to generate cash sufficient to pay
    interest on our indebtedness and to make distributions to our
    partners; and
    our operating performance and return on invested capital as
    compared to those of other publicly traded limited partnerships
    that own energy infrastructure assets, without regard to their
    financing methods and capital structure.
 16




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##### Table of Contents



Spectra EnergyPartners, LPPro FormaSpectra Energy Partners Predecessor Combined


Year EndedYear Ended December 31,


December 31,2004


2005


2006


2006(In thousands)Spectra Energy
    PartnersReconciliation of Non-GAAP
    Adjusted EBITDA and Cash Available for
    Distribution to GAAP Net
    IncomeNet income

$
53,151


$
56,950


$
61,608


$
63,696Add:Interest expense


8,258



8,506



8,151



26,951Income tax expense


9,202



7,834



10,741



453Depreciation and amortization


21,492



23,640



18,986



18,986Less:Interest income


6



24



15



10,615Equity in earnings of Gulfstream


11,081



16,611



16,763



16,763Equity in earnings of Market Hub


24,414



29,676



24,342



24,342Other income (expenses), net


1,485



528



1,765



1,765Adjusted EBITDA

$
55,117


$
50,091


$
56,601


$
56,601Add:Cash available for distribution
    from Gulfstream


17,097



25,480



23,800



23,800Cash available for distribution
    from Market Hub


21,204



18,753



19,500



19,500Less:Incremental general and
    administrative expense of being a public company














5,500Net cash paid for interest expense
    (income), net


12,955



8,566



8,591



16,591Maintenance capital expenditures


6,679



8,232



10,933



10,933Cash available for
    distribution

$
73,784


$
77,526


$
80,377


$
66,877Reconciliation of Non-GAAP
    Adjusted EBITDA and Cash Available for
    Distribution to GAAP Net cash provided by operating
    activitiesNet cash provided by operating
    activities

$
83,987


$
93,272


$
62,278


$
64,741Interest income


(6
)


(24
)


(15
)


(10,615
)Interest expense


8,258



8,506



8,151



26,951Income taxes


(21,964
)


3,465



(2,072
)


(12,360
)Distributions received from Market
    Hub














Distributions received from
    Gulfstream


(13,720
)


(29,645
)


(20,335
)


(20,335
)Other


0



36



314



314Changes in operating working
    capital:Accounts receivable


848



(934
)


(49
)


(49
)Other current assets


6,294



(6,189
)


878



878Accounts payable


4,787



(1,687
)


798



798Taxes accrued


(17,694
)


(7,527
)


3,345



3,345Other current liabilities


3,197



(1,617
)


8,927



8,552Other, including changes in
    noncurrent assets and liabilities


1,130



(7,565
)


(5,619
)


(5,619
)Adjusted EBITDA

$
55,117


$
50,091


$
56,601


$
56,601Add:Cash available for distribution
    from Gulfstream


17,097



25,480



23,800



23,800Cash available for distribution
    from Market Hub


21,204



18,753



19,500



19,500Less:Incremental general and
    administrative expense of being a public company














5,500Net cash paid for interest expense
    (income), net


12,955



8,566



8,591



16,591Maintenance capital expenditures


6,679



8,232



10,933



10,933Cash available for
    distribution

$
73,784


$
77,526


$
80,377


$
66,877
 17




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##### Table of Contents



GulfstreamYear Ended December 31,2004


2005


2006(In thousands)GulfstreamReconciliation of non-GAAP
    Adjusted EBITDA and Cash Available for
    Distribution to GAAP Net
    IncomeNet income

$
45,228


$
67,800


$
68,422Add:Interest expense


9,092



25,540



48,787Depreciation and amortization


25,354



29,190



30,406Less:Other income (expenses), net


3,353



1,783



431Adjusted EBITDA 
    100%

$
76,321


$
120,747


$
147,184Adjusted EBITDA  our
    24.5%

$
18,699


$
29,583


$
36,060Less:Net cash paid for interest expense


6,349



15,794



49,423Maintenance capital expenditures


190



955



617Cash available for
    distribution  100%

$
69,782


$
103,998


$
97,144Cash available for
    distribution  our 24.5%

$
17,097


$
25,480


$
23,800Reconciliation of Non-GAAP
    Adjusted EBITDA and Cash Available for
    Distribution to GAAP Net cash provided by operating
    activitiesNet cash provided by operating
    activities

$
76,617


$
111,858


$
107,083Interest expense


9,092



25,540



48,787Other


(5,571
)


(4,962
)


493Changes in operating working
    capital:Accounts receivable


(420
)


9,698



(3,772
)Other current assets


(3,575
)


143



545Accounts payable


(102
)


2,066



(994
)Accrued taxes


1,264



(4,861
)


(8,050
)Accrued interest


(1,573
)


(6,709
)


687Accrued liabilities


172



(5,830
)


875Fuel tracker liabilities






(2,962
)


2,260Other current liabilities


(223
)


(2,940
)


(3,197
)Other, including changes in
    noncurrent assets and liabilities


640



(294
)


2,467Adjusted EBITDA 
    100%

$
76,321


$
120,747


$
147,184Adjusted EBITDA  our
    24.5%

$
18,699


$
29,583


$
36,060Less:Net cash paid for interest expense


6,349



15,794



49,423Maintenance capital expenditures


190



955



617Cash available for
    distribution  100%

$
69,782


$
103,998


$
97,144Cash available for
    distribution  our 24.5%

$
17,097


$
25,480


$
23,800
 18




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##### Table of Contents



Market HubYear ended December 31,2004


2005


2006(In thousands)Market HubReconciliation of Non-GAAP
    Adjusted EBITDA and Cash Available for
    Distribution to GAAP Net
    IncomeNet income

$
48,829


$
59,353


$
48,684Add:Interest expense










2,636Depreciation and amortization


6,788



6,938



7,815Less:Interest income


30



41



11Other income (expenses), net


1,533



1,146



10,553Adjusted EBITDA 
    100%

$
54,054


$
65,104


$
48,571Adjusted EBITDA  our
    50.0%

$
27,027


$
32,552


$
24,286Less:Net cash paid for interest expense










43Maintenance capital expenditures


11,646



27,599



9,528Cash available for
    distribution  100%

$
42,408


$
37,505


$
39,000Cash available for
    distribution  our 50.0%

$
21,204


$
18,753


$
19,500Reconciliation of Non-GAAP
    Adjusted EBITDA and Cash Available for
    Distribution to GAAP Net cash provided by operating
    activitiesNet cash provided by operating
    activities

$
42,904


$
62,278


$
168,771Interest income


(30
)


(41
)


(11
)Interest expense










2,636Other


6



(10
)


Changes in operating working
    capital:Accounts receivable


36,682



(16,306
)


(5,944
)Inventory


808



3,137



(6,113
)Other current assets


(260
)






Accounts payable


(1,593
)


363



(4,804
)Accrued taxes


214



506



(379
)Collateral liabilities


(1,799
)


(491
)


(56,341
)Other accrued liabilities


(22,852
)


14,587



(2,638
)Other, including changes in
    noncurrent assets and liabilities


(26
)


1,081



(46,606
)Adjusted EBITDA 
    100%

$
54,054


$
65,104


$
48,571Adjusted EBITDA  our
    50.0%

$
27,027


$
32,552


$
24,286Less:Net cash paid for interest expense










43Maintenance capital expenditures


11,646



27,599



9,528Cash available for
    distribution  100%

$
42,408


$
37,505


$
39,000Cash available for
    distribution  our 50.0%

$
21,204


$
18,753


$
19,500
 19




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##### Table of Contents



RISK
    FACTORS  Limited partner interests are inherently different from
    capital stock of a corporation, although many of the business
    risks to which we are subject are similar to those that would be
    faced by a corporation engaged in similar businesses. You should
    consider carefully the following risk factors together with all
    of the other information included in this prospectus in
    evaluating an investment in our common units.
  If any of the following risks were actually to occur, our
    business, financial condition, results of operations and cash
    flows could be materially adversely affected. In that case, we
    might not be able to make distributions on our common units, the
    trading price of our common units could decline and you could
    lose all or part of your investment.
 Risks
    Related to Our Business  We may
    not have sufficient cash from operations following the
    establishment of cash reserves and payment of fees and expenses,
    including cost reimbursements to our general partner, to enable
    us to make cash distributions to holders of our common units and
    subordinated units at the initial distribution rate under our
    cash distribution policy.
 
   
  
    the rates we charge for our transportation and storage services
    and the volumes of natural gas our customers transport and store;
    the overall demand for natural gas in the Southeastern and
    Mid-Atlantic regions of the United States and the quantities of
    natural gas available for transport, especially from the Gulf of
    Mexico, Appalachian and Mid-Continent areas;
    regulatory action affecting the demand for natural gas, the
    supply of natural gas, the rates we can charge, how we contract
    for services, our existing contracts, our operating costs and
    our operating flexibility;
    regulatory and economic limitations on the development of LNG
    import terminals in the Gulf Coast region;
    successful development of LNG import terminals in the eastern or
    northeastern United States, which could reduce the need for
    natural gas to be transported on the East Tennessee pipeline
    system and for the development of additional natural gas storage
    capacity in the Gulf Coast region; and
    the level of our operating and maintenance and general and
    administrative costs.    
    the level of capital expenditures we make to complete
    construction projects;
    our debt service requirements and other liabilities;
    fluctuations in our working capital needs;
    our ability to borrow funds and access capital markets; 20




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##### Table of Contents




    restrictions on distributions contained in our debt
    agreements; and
    the amount of cash reserves established by our general partner.    On a
    pro forma basis we would not have had sufficient cash available
    for distribution to pay the full minimum quarterly distribution
    on all units for the year ended December 31,
    2006.
 
   
  The
    assumptions underlying our minimum estimated cash available for
    distribution we include in Our Cash Distribution Policy
    and Restrictions on Distributions are inherently uncertain
    and are subject to significant business, economic, financial,
    regulatory and competitive risks and uncertainties that could
    cause actual results to differ materially from those
    estimated.
    Gulfstream
    and Market Hub are controlled by Spectra Energy and other third
    parties who are responsible for their management and operations.
    As a result we cannot control the amount of cash we will receive
    from Gulfstream and Market Hub and we may be required to
    contribute significant cash to fund their
    operations.
    
    We have limited ability to influence decisions with respect to
    the operation of Market Hub and Gulfstream, including decisions
    with respect to incurrence of expenses and distributions to us;
    Gulfstream and Market Hub may establish reserves for working
    capital and maintenance capital expenditures which would reduce
    cash otherwise available for distribution to us;
    Gulfstream and Market Hub may incur additional indebtedness, and
    related principal and interest payments that reduce cash
    otherwise available for distribution to us;
    Market Hub and Gulfstream may require us to make additional
    capital contributions to fund working and maintenance capital
    expenditures, as well as to fund expansion capital expenditures,
    our funding of which would reduce the amount of cash otherwise
    available for distribution to you.   21




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##### Table of Contents



Our
    natural gas transportation and storage operations are subject to
    regulation by FERC, which could have an adverse impact on our
    ability to establish transportation and storage rates that would
    allow us to recover the full cost of operating our pipelines,
    including a reasonable return, and our ability to make
    distributions to you.
    
    rates, operating terms and conditions of service;
    the types of services we may offer to our customers;
    construction of new facilities;
    acquisition, extension or abandonment of services or facilities;
    accounts and records; and
    relationships with affiliated companies involved in certain
    aspects of the natural gas business.           22




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##### Table of Contents



The
    outcome of certain rate cases involving FERC policy statements
    is uncertain and could affect our ability to include an income
    tax allowance in our cost of service based rates, which would in
    turn impact our revenues.
 
  case-by-case
     
  Certain
    of our transportation services are subject to long-term,
    fixed-price negotiated rate contracts that are not
    subject to adjustment, even if our cost to perform such services
    exceeds the revenues received from such contracts, and, as a
    result, our costs could exceed our revenues received under such
    contracts.
 
   23




---



##### Table of Contents



Market
    Hubs right to charge market-based rates at
    certain of its facilities is subject to the continued existence
    of certain conditions related to the competitive position of
    Market Hub and, if those conditions change, the right to charge
    market-based rates could be
    terminated.
  cost-of-service cost-of-service
  Increased
    competition from alternative natural gas transportation and
    storage options and alternative fuel sources could have a
    significant financial impact on us.
     
  Any
    significant decrease in supplies of natural gas in our areas of
    operation could adversely affect our business and operating
    results and reduce our cash available for distribution to
    unitholders.
 
 
   
 24




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##### Table of Contents



The
    failure of LNG import terminals to be successfully developed in
    the Gulf Coast region or the successful development of LNG
    import terminals outside our areas of operations could reduce
    the demand for our services.
    
    new projects may fail to be developed;
    new projects may not be developed at their announced capacity;
    development of new projects may be significantly delayed;
    new projects may be built in locations that are not connected to
    our systems; or    new projects may not influence sources of
    supply on our systems.      We may
    not be able to maintain or replace expiring natural gas
    transportation and storage contracts at favorable
    rates.
      
    the level of existing and new competition to deliver natural gas
    to our markets;
    the growth in demand for natural gas in our markets;
    whether the market will continue to support long-term contracts;
    whether our business strategy continues to be
    successful; and
    the effects of state regulation on customer contracting
    practices. 25




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We
    depend on certain key customers for a significant portion of our
    revenues. The loss of any of these key customers could result in
    a decline in our revenues and cash available to make
    distributions to you.
    If
    third-party pipelines and other facilities interconnected to our
    pipelines and facilities become unavailable to transport natural
    gas, our revenues and cash available to make distributions to
    you could be adversely affected.
 
   
  Neither
    Gulfstream nor Market Hub is prohibited from incurring
    indebtedness, which may affect our ability to make distributions
    to you.
   26




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##### Table of Contents



If we
    do not complete expansion projects or make and integrate
    acquisitions, our future growth may be limited.
    
    we are unable to identify attractive expansion projects or
    acquisition candidates or we are outbid by competitors;
    we are unable to obtain necessary rights of way or government
    approvals;
    we are unable to raise financing for such expansions projects or
    acquisitions on economically acceptable terms; or
    we are unable to secure adequate customer commitments to use the
    newly expanded or acquired facilities. 
  Acquisitions
    or expansion projects that appear to be accretive may
    nevertheless reduce our cash from operations on a per unit
    basis.
 
 
   
  
    mistaken assumptions about volumes, reserves, revenues and
    costs, including synergies and potential growth;
    an inability to integrate successfully the businesses we build
    or acquire;
    a decrease in our liquidity as a result of our using a
    significant portion of our available cash or borrowing capacity
    to finance the project or acquisition;
    an inability to complete expansion projects on schedule or
    within the budgeted cost due to the unavailability of required
    construction personnel or materials, accidents, weather
    conditions or an inability to obtain necessary permits;
    the assumption of unknown liabilities for which we are not
    indemnified or for which our indemnity is inadequate;
    mistaken assumptions about the overall costs of equity or debt;
    the diversion of managements and employees attention
    from other business concerns;
    an inability to receive cash flows from a newly built or
    acquired asset until it is operational;
    unforeseen difficulties operating in new product areas or new
    geographic areas; and
    customer or key employee losses at the acquired business.   
  The
    amount of cash we have available for distribution to holders of
    our common units and subordinated units depends primarily on our
    cash flow and not solely on profitability, which may prevent us
    from making cash distributions during periods when we record net
    income.
 
   27




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Significant
    prolonged changes in natural gas prices could affect supply and
    demand, reducing throughput on our systems and adversely
    affecting our revenues and cash available to make distributions
    to you over the long-term.
    Our
    operations are subject to environmental laws and regulations
    that may expose us to significant costs and
    liabilities.
      We may
    incur significant costs and liabilities as a result of pipeline
    integrity management program testing and any necessary pipeline
    repair, or preventative or remedial measures.
    
    perform ongoing assessments of pipeline integrity;
    identify and characterize applicable threats to pipeline
    segments that could impact a high consequence area;
    improve data collection, integration and analysis;
    repair and remediate the pipeline as necessary; and
    implement preventive and mitigating actions. 28




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We do
    not own all of the land on which our pipelines and facilities
    are located, which could disrupt our operations.
  and/or rights-of-way rights-of-way right-of-way
  Our
    operations are subject to operational hazards and unforeseen
    interruptions.
    
    damage to pipelines, facilities and related equipment caused by
    hurricanes, tornadoes, floods, fires and other natural
    disasters, explosions and acts of terrorism;
    inadvertent damage from third parties, including from
    construction, farm and utility equipment;
    leaks of natural gas and other hydrocarbons or losses of natural
    gas as a result of the malfunction of equipment or facilities;
    collapse of storage caverns;
    operator error;
    environmental pollution;
    explosions and blowouts;
    risks related to underwater pipelines in the Gulf of Mexico,
    which are susceptible to damage from shifting as a result of
    water currents, as seen in the Gulf of Mexico following
    Hurricanes Katrina and Rita, as well as damage from vessels;
    risks related to pipeline traversing areas in Florida where
    Karst conditions exist. Karst conditions
    refers to terrain, usually found where limestone or other
    carbonate rock is present, that may subside or result in a
    sinkhole collapse when the underlying water table changes; and
    risks related to operating in a marine environment.  and/or
 29




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We do
    not insure against all potential losses and could be seriously
    harmed by unexpected liabilities.
    Our
    debt levels may limit our flexibility in obtaining additional
    financing and in pursuing other business
    opportunities.
 
   
  
    our ability to obtain additional financing, if necessary, for
    working capital, capital expenditures, acquisitions or other
    purposes may be impaired or such financing may not be available
    on favorable terms;
    we will need a substantial portion of our cash flow to make
    principal and interest payments on our indebtedness, reducing
    the funds that would otherwise be available for operation,
    future business opportunities and distributions to
    unitholders; and
    our debt level could make us more vulnerable than our
    competitors with less debt to competitive pressures or a
    downturn in our business or the economy generally.    Restrictions
    in our credit facility may interrupt distributions to us from
    our subsidiaries, which will limit our ability to make
    distributions to you and may limit our ability to capitalize on
    acquisition and other business opportunities.
    
    make distributions if any default or event of default occurs; 30




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
    incur additional indebtedness or guarantee other indebtedness;
    grant liens or make certain negative pledges;
    make certain loans or investments;
    make any material change to the nature of our business,
    including consolidations, liquidations and dissolutions; or
    enter into a merger, consolidation, sale and leaseback
    transaction or sale of assets.    The
    credit and risk profile of our general partner and its owner,
    Spectra Energy, could adversely affect our credit ratings and
    risk profile, which could increase our borrowing costs or hinder
    our ability to raise capital.
      Terrorist
    attacks, and the threat of terrorist attacks, have resulted in
    increased costs to our business. Continued hostilities in the
    Middle East or other sustained military campaigns may adversely
    impact our results of operations.
   31




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If we
    fail to develop or maintain an effective system of internal
    controls, we may not be able to report our financial results
    accurately, or prevent fraud which could have an adverse effect
    on our business and would likely have a negative effect on the
    trading price of our common units.
   Risks
    Inherent in an Investment in Us  Spectra
    Energy controls our general partner, which has sole
    responsibility for conducting our business and managing our
    operations. Our general partner and its affiliates, including
    Spectra Energy, have conflicts of interest with us and limited
    fiduciary duties, and may favor their own interests to your
    detriment.
    
    neither our partnership agreement nor any other agreement
    requires Spectra Energy to pursue a business strategy that
    favors us. Spectra Energys directors and officers have a
    fiduciary duty to make these decisions in the best interests of
    the owners of Spectra Energy, which may be contrary to our
    interests;
    our general partner is allowed to take into account the
    interests of parties other than us, such as Spectra Energy and
    its affiliates, in resolving conflicts of interest;
    Spectra Energy and its affiliates are not limited in their
    ability to compete with us. Please read
     Spectra Energy and its affiliates are not
    limited in their ability to compete with us;
    our general partner may make a determination to receive a
    quantity of our Class B units in exchange for resetting the
    target distribution levels related to its incentive distribution
    rights without the 32




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##### Table of Contents



approval of the conflicts committee of our general partner or
    our unitholders. Please read Provisions of Our Partnership
    Agreement Relating to Cash Distributions;  
    some officers of Spectra Energy who provide services to us also
    will devote significant time to the business of Spectra Energy,
    and will be compensated by Spectra Energy for the services
    rendered to it;
    our general partner has limited its liability and reduced its
    fiduciary duties, and has also restricted the remedies available
    to our unitholders for actions that, without the limitations,
    might constitute breaches of fiduciary duty. By purchasing
    common units, unitholders will be deemed to have consented to
    some actions and conflicts of interest that might otherwise
    constitute a breach of fiduciary or other duties under
    applicable law;
    our general partner determines the amount and timing of asset
    purchases and sales, borrowings, issuance of additional
    partnership securities and reserves, each of which can affect
    the amount of cash that is distributed to unitholders;
    our general partner determines the amount and timing of any
    capital expenditures and, based on the applicable facts and
    circumstances, whether a capital expenditure is classified as a
    maintenance capital expenditure, which reduces operating
    surplus, or an expansion capital expenditure, which does not
    reduce operating surplus. This determination can affect the
    amount of cash that is distributed to our unitholders and the
    ability of the subordinated units to convert to common units;
    our general partner determines which costs incurred by it and
    its affiliates are reimbursable by us;
    in some instances, our general partner may cause us to borrow
    funds in order to permit the payment of cash distributions, even
    if the purpose or effect of the borrowing is to make a
    distribution on the subordinated units, to make incentive
    distributions or to accelerate the expiration of the
    subordination period;
    our partnership agreement does not restrict our general partner
    from causing us to pay it or its affiliates for any services
    rendered to us or entering into additional contractual
    arrangements with any of these entities on our behalf;
    our general partner intends to limit its liability regarding our
    contractual and other obligations and, in some circumstances, is
    entitled to be indemnified by us;
    our general partner may exercise its limited right to call and
    purchase common units if it and its affiliates own more than 80%
    of the common units;
    our general partner controls the enforcement of obligations owed
    to us by our general partner and its affiliates; and
    our general partner decides whether to retain separate counsel,
    accountants or others to perform services for us.    Affiliates
    of our general partner, including Spectra Energy, DCP Midstream,
    LLC and DCP Midstream Partners, LP, are not limited in their
    ability to compete with us, which could limit our commercial
    activities or our ability to acquire additional assets or
    businesses.
   33




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If you
    are not an Eligible Holder, you will not be entitled to receive
    distributions or allocations of income or loss on your common
    units and your common units will be subject to
    redemption.
    Cost
    reimbursements to our general partner and its affiliates for
    services provided, which will be determined by our general
    partner, will be substantial and will reduce our cash available
    for distribution to you.
    Our
    partnership agreement limits our general partners
    fiduciary duties to holders of our common units and subordinated
    units and restricts the remedies available to holders of our
    common units and subordinated units for actions taken by our
    general partner that might otherwise constitute breaches of
    fiduciary duty.
    
    permits our general partner to make a number of decisions in its
    individual capacity, as opposed to in its capacity as our
    general partner. This entitles our general partner to consider
    only the interests and factors that it desires, and it has no
    duty or obligation to give any consideration to any interest of,
    or factors affecting, us, our affiliates or any limited partner.
    Examples include the exercise of its limited call right, the
    exercise of its rights to transfer or vote the units it owns,
    the exercise of its registration rights and its determination
    whether or not to consent to any merger or consolidation of the
    partnership or amendment to the partnership agreement;
    provides that our general partner will not have any liability to
    us or our unitholders for decisions made in its capacity as a
    general partner so long as it acted in good faith, meaning it
    believed the decision was in the best interests of our
    partnership; 34




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##### Table of Contents




    generally provides that affiliated transactions and resolutions
    of conflicts of interest not approved by the conflicts committee
    of the board of directors of our general partner acting in good
    faith and not involving a vote of unitholders must be on terms
    no less favorable to us than those generally being provided to
    or available from unrelated third parties or must be fair
    and reasonable to us, as determined by our general partner
    in good faith and that, in determining whether a transaction or
    resolution is fair and reasonable, our general
    partner may consider the totality of the relationships between
    the parties involved, including other transactions that may be
    particularly advantageous or beneficial to us;
    provides that our general partner and its officers and directors
    will not be liable for monetary damages to us, our limited
    partners or assignees for any acts or omissions unless there has
    been a final and non-appealable judgment entered by a court of
    competent jurisdiction determining that the general partner or
    those other persons acted in bad faith or engaged in fraud or
    willful misconduct or, in the case of a criminal matter, acted
    with knowledge that the conduct was criminal; and
    provides that in resolving conflicts of interest, it will be
    presumed that in making its decision the general partner acted
    in good faith, and in any proceeding brought by or on behalf of
    any limited partner or us, the person bringing or prosecuting
    such proceeding will have the burden of overcoming such
    presumption.    Our
    general partner may elect to cause us to issue Class B
    units to it in connection with a resetting of the target
    distribution levels related to our general partners
    incentive distribution rights without the approval of the
    conflicts committee of our general partner or holders of our
    common units and subordinated units. This may result in lower
    distributions to holders of our common units in certain
    situations.
     35




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Holders
    of our common units have limited voting rights and are not
    entitled to elect our general partner or its directors, which
    could reduce the price at which the common units will
    trade.
    Even
    if holders of our common units are dissatisfied, they cannot
    initially remove our general partner without its
    consent.
  2 3
  Our
    partnership agreement restricts the voting rights of unitholders
    owning 20% or more of our common units.
    We
    have a holding company structure in which our subsidiaries
    conduct our operations and own our operating assets, which may
    affect our ability to make distributions to you.
   36




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##### Table of Contents



Control
    of our general partner may be transferred to a third party
    without unitholder consent.
    You
    will experience immediate and substantial dilution of $6.43 in
    tangible net book value per common unit.
    Increases
    in interest rates could adversely impact our unit price and our
    ability to issue additional equity to make acquisitions, incur
    debt or for other purposes.
  50-year
  We may
    issue additional units without your approval, which would dilute
    your existing ownership interests.
    
    each unitholders proportionate ownership interest in us
    will decrease;
    the amount of cash available for distribution on each unit may
    decrease;
    because a lower percentage of total outstanding units will be
    subordinated units, the risk that a shortfall in the payment of
    the minimum quarterly distribution will be borne by our common
    unitholders will increase;
    the ratio of taxable income to distributions may increase;
    the relative voting strength of each previously outstanding unit
    may be diminished; and
    the market price of the common units may decline. 37




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Spectra
    Energy and its affiliates may sell units in the public or
    private markets, which sales could have an adverse impact on the
    trading price of the common units.
    Our
    general partner has a limited call right that may require you to
    sell your units at an undesirable time or price.
 
   
  Your
    liability may not be limited if a court finds that unitholder
    action constitutes control of our business.
    
    we were conducting business in a state but had not complied with
    that particular states partnership statute; or
    your right to act with other unitholders to remove or replace
    the general partner, to approve some amendments to our
    partnership agreement or to take other actions under our
    partnership agreement constitute control of our
    business.    Unitholders
    may have liability to repay distributions that were wrongfully
    distributed to them.
  Section 17-607
 38




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There
    is no existing market for our common units, and a trading market
    that will provide you with adequate liquidity may not
    develop.
 
   
  The
    price of our common units may fluctuate significantly, and you
    could lose all or part of your investment.
 
    
    our quarterly distributions;
    our quarterly or annual earnings or those of other companies in
    our industry;
    loss of a large customer;
    regulatory action on our rates or the services we provide;
    the adoption of new laws or regulations affecting us or adverse
    interpretation and application of existing laws or regulations
    affecting us;
    announcements by us or our competitors of significant contracts
    or acquisitions;
    changes in accounting standards, policies, guidance,
    interpretations or principles;
    general economic conditions;
    the failure of securities analysts to cover our common units
    after this offering or changes in financial estimates by
    analysts;
    future sales of our common units; and
    other factors described in these Risk Factors.  We
    will incur increased costs as a result of being a
    publicly-traded partnership.
   39




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##### Table of Contents



Tax Risks
    to Common Unitholders    Our
    tax treatment depends on our status as a partnership for federal
    income tax purposes, as well as our not being subject to a
    material amount of entity-level taxation by individual states.
    If the Internal Revenue Service treats us as a corporation or we
    become subject to a material amount of entity-level taxation for
    state tax purposes, it would substantially reduce the amount of
    cash available for distribution to our
    unitholders.
          An IRS
    contest of the federal income tax positions we take may
    adversely affect the market for our common units, and the cost
    of any IRS contest will reduce our cash available for
    distribution to our unitholders.
   40




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##### Table of Contents



You
    may be required to pay taxes on your share of our income even if
    you do not receive any cash distributions from us.
    Tax
    gain or loss on disposition of our common units could be more or
    less than expected.
    Tax-exempt
    entities and foreign persons face unique tax issues from owning
    common units that may result in adverse tax consequences to
    them.
  non-U.S. persons non-U.S. persons non-U.S. persons
  We
    will treat each purchaser of our common units as having the same
    tax benefits without regard to the actual common units
    purchased. The IRS may challenge this treatment, which could
    adversely affect the value of the common units.
   41




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##### Table of Contents



We
    have adopted certain valuation methodologies that may result in
    a shift of income, gain, loss and deduction between the general
    partner and the unitholders. The IRS may challenge this
    treatment, which could adversely affect the value of the common
    units.
 
 
   
 
   
  The
    sale or exchange of 50% or more of our capital and profits
    interests during any twelve-month period will result in the
    termination of our partnership for federal income tax
    purposes.
    You
    will likely be subject to state and local taxes and return
    filing requirements in states where you do not live as a result
    of investing in our common units.
   42




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##### Table of Contents



USE OF
    PROCEEDS   
  
    purchase $200.0 million of United States Treasury and other
    qualifying securities, which will be assigned as collateral to
    secure the term loan portion of our credit facility; 
 
  
    pay approximately $6.9 million of expenses associated with
    the offering and related formation transactions; and 
 
  
    use the remaining proceeds of approximately $8.7 million to
    fund working capital. 
 
   
     43




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##### Table of Contents



CAPITALIZATION   
  
    our capitalization as of December 31, 2006; and 
 
  
    our pro forma capitalization as of December 31, 2006, as
    adjusted to reflect this offering, the other transactions
    described under Summary  Formation Transactions
    and Partnership Structure  General and the
    application of the net proceeds from this offering as described
    under Use of Proceeds. 
    
 As of December 31, 2006Historical


Pro Forma(In thousands)Long-term debt:Revolving borrowings

$



$
125,000Term borrowings






200,000
(a)East Tennessee


150,000



150,000Total long-term debt

$
150,000


$
475,000Partners capital/parent net
    investment:Net parent equity

$
985,333


$
Common units  public






209,693Common units  sponsor






439,890Subordinated units 
    sponsor






295,553General partner interest






18,472Total partners
    capital/parent net investment


985,333



963,608Total capitalization

$
1,135,333


$
1,438,608  
   
  (a)
    
    Our term borrowings are collateralized by $200 million in
    United States Treasury and other qualifying securities not
    included in the capitalization table shown above. Please see
    Use of Proceeds. 
 44




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##### Table of Contents



DILUTION    Assumed initial public offering
    price per common unit





$
20.00Net tangible book value per common
    unit before the offering(a)

$
17.04Decrease in net tangible book
    value per common unit attributable to purchasers in the offering


(3.47
)Less: Pro forma net tangible book
    value per common unit after the offering(b)






13.57Immediate dilution in tangible net
    book value per common unit to purchasers in the offering





$
(6.43
)    (a)
    
    Determined by dividing the number of units and general partner
    units (29,812,011 common units, 20,030,066 subordinated units
    and 1,251,879 general partner units) to be issued to a
    subsidiary of Spectra Energy for its contribution of assets and
    liabilities to Spectra Energy Partners, LP into the net tangible
    book value of the contributed assets and liabilities.(b)
    
    Determined by dividing the total number of units and general
    partner units to be outstanding after the offering (41,312,011
    common units, 20,030,066 subordinated units and 1,251,879
    general partner units) and the application of the related net
    proceeds into our pro forma net tangible book value, after
    giving effect to the application of the expected net proceeds of
    the offering.    Units Acquired


Total ConsiderationNumber


Percent


Amount


Percent(In thousands)General partner and
    affiliates(a)(b)


51,093,956



81.6
%

$
753,915



76.6
%New investors


11,500,000



18.4
%


230,000



23.4
%Total


62,593,956



100.0
%

$
983,915



100.0
%    (a)
    
    The common and subordinated units and general partner units
    acquired by our general partner and its affiliates consist of
    29,812,011 common units and 20,030,066 subordinated units and
    1,251,879 general partner units.(b)
    
    The assets contributed by our general partner and its affiliates
    were recorded at historical cost in accordance with GAAP. Book
    value of the consideration provided by our general partner and
    its affiliates, as of December 31, 2006, after giving
    effect to the application of the net proceeds of this offering
    is as follows:     (In thousands)Parent net investment

$
985,333Less: Payment to affiliates of our
    general partner from the net proceeds of the offering and
    borrowings under the credit facility


(325,000
)Plus: Retention by Spectra Energy
    of accounts receivable, tax related accounts, and certain Market
    Hub assets


98,060Less: Contribution to Market Hub
    from Spectra Energy for funds swept for security deposits


(4,478
)Total consideration

$
753,915  45




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OUR CASH
    DISTRIBUTION POLICY AND RESTRICTIONS ON DISTRIBUTIONS  You should read the following discussion of our cash
    distribution policy in conjunction with specific assumptions
    included in this section. For more detailed information
    regarding the factors and assumptions upon which our cash
    distribution policy is based, please read Assumptions and
    Considerations below. In addition, you should read
    Forward-Looking Statements and Risk
    Factors for information regarding statements that do not
    relate strictly to historical or current facts and certain risks
    inherent in our business.
  For additional information regarding our historical and pro
    forma operating results, you should refer to our historical
    combined financial statements for the years ended
    December 31, 2004, 2005 and 2006, and our unaudited pro
    forma condensed combined financial statements for the year ended
    December 31, 2006 included elsewhere in this prospectus.
 General  Rationale for Our Cash Distribution
    Policy.
  Limitations on Cash Distributions and Our Ability to
    Change Our Cash Distribution Policy.
  
    Our cash distribution policy is subject to restrictions on
    distributions under our new credit facility. Specifically, the
    agreement related to our credit facility contains material
    financial tests and covenants that we must satisfy. These
    financial tests and covenants are described in this prospectus
    under the caption Managements Discussion and
    Analysis of Financial Condition and Results of
    Operations  Capital Requirements 
    Description of Credit Agreement. Should we be unable to
    satisfy these restrictions under our credit facility or if we
    are otherwise in default under our credit facility, we would be
    prohibited from making cash distributions to you notwithstanding
    our stated cash distribution policy.
    Our board of directors will have the authority to establish
    reserves for the prudent conduct of our business and for future
    cash distributions to our unitholders, and the establishment of
    those reserves could result in a reduction in cash distributions
    to you from the levels we currently anticipate pursuant to our
    stated distribution policy.
    While our partnership agreement requires us to distribute all of
    our available cash, our partnership agreement, including
    provisions requiring us to make cash distributions contained
    therein, may be amended. Although during the subordination
    period, with certain exceptions, our partnership agreement may
    not be amended without the approval of the public common
    unitholders, our partnership agreement can be amended with the
    approval of a majority of the outstanding common units and any
    Class B units issued upon the reset of incentive
    distribution rights, if any, voting as a class (including common
    units held by affiliates of Spectra Energy) after the
    subordination period has ended. At the closing of this offering,
    a subsidiary of Spectra Energy will own our general partner and
    approximately 81.3% of our outstanding common units and
    subordinated units.
    Even if our cash distribution policy is not modified or revoked,
    the amount of distributions we pay under our cash distribution
    policy and the decision to make any distribution is determined
    by our general partner, taking into consideration the terms of
    our partnership agreement. 46




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
    Under
    Section 17-607
    of the Delaware Revised Uniform Limited Partnership Act, we may
    not make a distribution to you if the distribution would cause
    our liabilities to exceed the fair value of our assets. 
  
    We may lack sufficient cash to pay distributions to our
    unitholders due to increases in our operating or general and
    administrative expenses, principal and interest payments on our
    outstanding debt, tax expenses, working capital requirements and
    anticipated cash needs. Our cash available for distribution to
    unitholders is directly impacted by our cash expenses necessary
    to run our business and will be reduced dollar-for-dollar to the
    extent that such uses of cash increase. Please read
    Provisions of our partnership Agreement Relating to Cash
    Distributions  Distributions of Available Cash. 
  
    We own a 24.5% interest in Gulfstream, a subsidiary of Spectra
    Energy owns a 25.5% interest and a subsidiary of The Williams
    Companies owns the remaining 50.0% interest. Gulfstream is
    required by the terms of its limited liability company agreement
    to make quarterly cash distributions equal to 100% of its
    available cash, which is defined to include Gulfstreams
    cash and cash equivalents on hand at the end of the quarter less
    any reserves that may be deemed appropriate by the Gulfstream
    management committee for the operation of Gulfstreams
    business (including reserves for its future maintenance capital
    expenditures and for its anticipated future credit needs) or for
    its compliance with law or other agreements. The management
    committee representative of Spectra Energy and The Williams
    Companies will jointly make the determinations related to
    Gulfstreams available cash. The limited liability company
    agreement of Gulfstream may not be amended without the approval
    of Spectra Energy, The Williams Companies and us. Please read
    Certain Relationships and Related Party
    Transactions  Contracts with Affiliates 
    Gulfstream Limited Liability Company Agreement.
    We own a 50.0% interest in Market Hub and a subsidiary of
    Spectra Energy owns the other 50.0% interest. Market Hub is
    required by the terms of its limited liability company agreement
    to make quarterly cash distributions equal to 100% of its
    available cash, which is defined to include Market Hubs
    cash and cash equivalents on hand at the end of the quarter less
    any reserves that may be deemed appropriate by the Market Hub
    management committee for the operation of Market Hubs
    business (including reserves for its future maintenance capital
    expenditures and for its anticipated future credit needs) or for
    its compliance with law or other agreements. The management
    committee representative of Spectra Energy and us will jointly
    make the determinations related to Market Hubs available
    cash. The limited liability company agreement of Market Hub may
    not be amended without the approval of Spectra Energy and us.
    Please read Certain Relationships and Related Party
    Transactions  Contracts with Affiliates 
    Market Hub Limited Liability Company Agreement.  Our Ability to Grow is Dependent on Our Ability to Access
    External Expansion Capital.
 47




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Our
    Initial Distribution Rate   
    DistributionsNumber of Units


One Quarter


Four QuartersPublicly held common units


11,500,000


$
3,737,500


$
14,950,000Common units held by Spectra Energy


29,812,011



9,688,904



38,755,614Subordinated units held by Spectra
    Energy


20,030,066



6,509,771



26,039,086General partner units held by
    Spectra Energy


1,251,879



406,861



1,627,443Total


62,593,956


$
20,343,036


$
81,372,143        48




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
    Unaudited Pro Forma Cash Available for Distribution,
    in which we present the amount of cash we would have had
    available for distribution for our fiscal year ended
    December 31, 2006 derived from our unaudited pro forma
    financial statements that are included in this prospectus, which
    unaudited pro forma financial statements are based on the
    audited historical combined financial statements of Spectra
    Energy Partners Predecessor for the year ended December 31,
    2006, as adjusted to give pro forma effect to: 
  
    the transactions to be completed as of the closing of this
    offering, including our incurrence of approximately
    $200 million of term borrowings and $125 million of
    revolving borrowings under our new $500 million credit
    facility; and 
  
    this offering and the application of the net proceeds as
    described under Use of Proceeds. 49




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
    Statement of Minimum Estimated Cash Available for
    Distribution, in which we demonstrate our anticipated
    ability to generate the minimum estimated cash available for
    distribution necessary for us to pay distributions at the
    initial distribution rate on all units for the twelve months
    ending June 30, 2008. Unaudited
    Pro Forma Cash Available for Distribution for the Year Ended
    December 31, 2006   
  Schedule K-1
     50




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##### Table of Contents



SPECTRA
    ENERGY PARTNERS, LP
  UNAUDITED
    PRO FORMA COMBINED CASH AVAILABLE FOR DISTRIBUTION
 
  
 Year EndedDecember 31, 2006(In thousands, exceptper unit data)Pro Forma Net
    Income(a)

$
63,696Add:Interest expense(b)


26,951Income tax expense(b)


453Depreciation and amortization(b)


18,986Less:Interest income(b)


10,615Equity in earnings of Gulfstream(c)


16,763Equity in earnings of Market Hub(c)


24,342Other income (expense), net(b)


1,765Pro forma Adjusted
    EBITDA(d)

$
56,601Add:Pro forma cash available for
    distribution from Gulfstream(e)


23,800Pro forma cash available for
    distribution from Market Hub(f)


19,500Less:Incremental general and
    administrative expense of being a public company(g)


5,500Pro forma net cash paid for
    interest expense(h)


16,591Maintenance capital expenditures(i)


10,933Pro forma cash available for
    distribution

$
66,877Pro forma cash
    distributions:Distributions per unit(j)

$
1.30Distributions to public common
    unitholders(j)


14,950Distributions to Spectra Energy(j)


66,422Total distributions(j)

$
81,372Excess (shortfall)

$
(14,495
)Interest coverage ratio(k)


5.8
xLeverage ratio(k)


2.9
x  
    (a)
    
    Reflects net income of Spectra Energy Partners Predecessor
    derived from its historical combined financial statements for
    the periods indicated giving pro forma effect to the offering
    and the related transactions.(b)
    
    Reflects adjustments to reconcile pro forma net income to pro
    forma Adjusted EBITDA.(c)
    
    Reflects an adjustment to our Adjusted EBITDA for the
    elimination of Gulfstream and Market Hubs equity earnings. 
  (d)
    
    Our Adjusted EBITDA is defined as net income plus interest,
    income taxes, depreciation and amortization less our equity
    earnings in Gulfstream and Market Hub, interest income and other
    income (expenses), net, which primarily consists of a non-cash
    allowance for funds used during construction, or AFUDC, and
    certain other items such as insurance recoveries. We have
    provided Adjusted EBITDA in this prospectus because we believe
    it provides investors with additional information to measure our
    financial performance and liquidity. Adjusted EBITDA is not a
    presentation made in accordance with GAAP. Because Adjusted
    EBITDA excludes some, but not all, items that affect net income
    and is defined differently by different companies in our
    industry, our definition of Adjusted EBITDA may not be
    comparable to similarly titled measures of other companies.
    Adjusted EBITDA has important limitations as an analytical tool,
    and you should not consider it in isolation, or as a substitute
    for analysis of our results as reported under GAAP. Please read
    Summary  Summary Historical and Pro Forma
    Financial and Operating Data  Non-GAAP Financial
    Measures. 
 51




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##### Table of Contents



(e)
    
    Pro forma cash available for distribution from Gulfstream for
    the year ended December 31, 2006 is calculated as follows:  Year EndedGulfstream

December 31, 2006(In thousands)Net income

$
68,422Add:Interest expense


48,787Depreciation and amortization


30,406Less:Other income (expenses), net


431Adjusted EBITDA

$
147,184Less:Net cash paid for interest expense


49,423Maintenance capital expenditures


617Pro forma cash available for
    distribution  100%

$
97,144Pro forma cash available for
    distribution  our 24.5%

$
23,800   (f)
    
    Pro forma cash available for distribution from Market Hub for
    the year ended December 31, 2006 is calculated as follows:  
 Year EndedMarket Hub

December 31, 2006(In thousands)Net income

$
48,684Add:Interest expense


2,636Depreciation and amortization


7,815Less:Interest income


11Other income (expenses), net


10,553Adjusted EBITDA

$
48,571Less:Net cash paid for interest expense


43Maintenance capital expenditures


9,528Pro forma cash available for
    distribution  100%

$
39,000Pro forma cash available for
    distribution  our 50.0%

$
19,500  
  (g)
    
    Reflects an adjustment to our adjusted EBITDA for an estimated
    incremental cash expense associated with being a publicly traded
    limited partnership, including compensation and benefit expenses
    of our executive management personnel, costs associated with
    annual and quarterly reports to unitholders, tax return and
    Schedule K-1
    preparation and distribution, independent auditor fees, investor
    relations activities, registrar and transfer agent fees,
    incremental director and officer liability insurance costs and
    director compensation.(h)
    
    Reflects on a net basis the interest expense related to
    borrowings under our credit facility made in connection with
    this offering and the interest income related to the long-term
    investments we intend to purchase with a portion of the proceeds
    from this offering. 52




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(i)
    
    Maintenance capital expenditures are capital expenditures made
    to replace partially or fully depreciated assets, to maintain
    the existing operating capacity of our assets and to extend
    their useful lives, or other capital expenditures that are
    incurred in maintaining existing system volumes and related cash
    flows. 
  In addition, we made expansion capital expenditures of
    $75.0 million for the year ended December 31, 2006.
    Expansion capital expenditures are made to acquire additional
    assets to grow our business, to expand and upgrade our systems
    and facilities and to construct or acquire similar systems or
    facilities. These expenditures were assumed to be funded by cash
    contributions from our parent, Spectra Energy, and are not
    included in our pro forma cash available for distribution
    calculation.(j)
    
    The table below sets forth the assumed number of outstanding
    common units, subordinated units and general partner units upon
    the closing of this offering and the estimated per unit and
    aggregate distribution amounts payable on our common units,
    subordinated units and general partner units for four quarters
    at our initial distribution rate of $0.325 per common unit per
    quarter ($1.30 per common unit on an annualized basis).  Distribution forNumber of


Four QuartersUnits


Per Unit


AggregatePro forma distributions on
    publicly held common units


11,500,000


$
1.30


$
14,950,000Pro forma distributions on common
    units held by Spectra Energy


29,812,011



1.30



38,755,614Pro forma distribution on
    subordinated units held by Spectra Energy


20,030,066



1.30



26,039,086Pro forma distribution on general
    partner units


1,251,879



1.30



1,627,443Total


62,593,956


$
1.30


$
81,372,143  
  (k)
    
    In connection with the closing of this offering, we will enter
    into a $500 million credit agreement under which we expect
    to borrow $200 million in term debt and $125 million
    in revolving debt. We expect that the credit agreement will
    contain covenants limiting our ability to make distributions,
    incur indebtedness, grant liens, and engage in transactions with
    affiliates, which covenants may be modified or eliminated upon
    our receipt of an investment grade rating. 
 
  In addition, the credit agreement will contain financial
    covenants requiring us to maintain: 
 
   an interest coverage ratio (the ratio of our
    consolidated EBITDA to our consolidated interest expense (net of
    interest income), in each case as defined in the credit
    agreement) of not less than 2.5 to 1.0, determined as of the
    last day of each quarter for the four-quarter period ending on
    the date of determination; and 
 
   a leverage ratio (the ratio of our consolidated
    indebtedness to our consolidated EBITDA, in each case as defined
    in the credit agreement) of not more than 5.0 to 1.0 (or, on a
    temporary basis for not more than three consecutive quarters
    following the consummation of certain acquisitions, not more
    than 5.5 to 1.0). 
 
  On a pro forma basis for the year ended December 31, 2006,
    we would have been in compliance with these covenants. 
 
  If an event of default exists under the credit agreement, we
    expect that the lenders will be able to accelerate the maturity
    of the credit agreement and exercise other rights and remedies.
    The credit agreement is subject to a number of conditions,
    including the negotiation, execution and delivery of definitive
    documentation. 
 Minimum
    Estimated Cash Available for Distribution for the Twelve-Month
    Period Ending June 30, 2008   53




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54




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SPECTRA
    ENERGY PARTNERS, LP
  STATEMENT
    OF
 MINIMUM
    ESTIMATED CASH AVAILABLE FOR DISTRIBUTION
  
 Twelve monthsending June 30,2008(In thousands,except perunit data)Operating revenues

$
103,078Operating expenses:Operations, maintenance and other


36,924Depreciation and amortization


21,548Property and other taxes


7,294Total operating expenses


65,766Operating income


37,312Add:Equity earnings of Gulfstream


22,114Equity earnings of Market Hub


31,535Interest income(a)


11,500Less:Interest expense(b)


30,220Net income


72,241Adjustments to reconcile net
    income to Adjusted EBITDA:Add:Depreciation and amortization


21,548Interest expense(b)


30,220Less:Equity earnings in Gulfstream


22,114Equity earnings in Market Hub


31,535Interest income(a)


11,500Cash reserve(c)


3,693Adjusted EBITDA


55,167 
 55




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##### Table of Contents



Twelve monthsending June 30,2008(In thousands,except perunit data)Add:Interest income


11,500Estimated cash available for
    distribution from Gulfstream(d)


23,806Estimated cash available for
    distribution from Market Hub(e)


32,886Less:Cash interest expense


30,220Maintenance capital expenditures


11,767Minimum estimated cash
    available for distribution

$
81,372Per unit minimum annual
    distribution

$
1.30Annual distributions to:Public common unitholders


14,950Spectra Energy


66,422Total distributions to our
    unitholders and general partner at the initial distribution rate

$
81,372Interest coverage ratio(f)


6.2
xLeverage ratio(f)


3.1
x  
   
  (a)
    
    Reflects the interest income related to the long-term
    investments we intend to purchase with a portion of the proceeds
    from this offering. 
 
  (b)
    
    Reflects the interest expense related to borrowings under our
    credit facility made in connection with this offering. 
 
  (c)
    
    Represents a discretionary reserve to be used for reinvestment
    and other general partnership purposes. 
 
  (d)
    
    Gulfstreams estimated cash available for distribution for
    the twelve months ending June 30, 2008 is calculated as
    follows: 
  Twelve monthsendingGulfstream

June 30, 2008(In thousands)Net income

$
90,263Add:Depreciation and amortization
    expense


30,309Interest expense, net


32,536Less:Other income (expenses), net


4,798Adjusted EBITDA


148,310Less:Cash interest expense, net


49,307Maintenance capital expenditures


1,834Estimated cash available for
    distribution from Gulfstream  100%

$
97,169Estimated cash available for
    distribution from Gulfstream  our 24.5%

$
23,806  
  (e)
    
    Market Hubs estimated cash available for distribution for
    the twelve months ending June 30, 2008 is calculated as
    follows: 
  56




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Twelve monthsendingMarket Hub

June 30, 2008(In thousands)Net income

$
63,071Add:Depreciation and amortization
    expense


8,344Less:Other income (expenses), net


2,641Adjusted EBITDA


68,774Less:Maintenance capital expenditures


2,946Cash paid for taxes


57Estimated cash available for
    distribution from Market Hub  100%

$
65,771Estimated cash available for
    distribution from Market Hub  our 50.0%

$
32,886  
  (f)
    
    Please read accompanying summary of the assumptions and
    considerations underlying these estimates. 
 
   
 
   
 
  
    an interest coverage ratio (the ratio of our consolidated EBITDA
    to our consolidated interest expense (net of interest income),
    in each case as defined in the credit agreement) of not less
    than 2.5 to 1.0, determined as of the last day of each quarter
    for the four-quarter period ending on the date of
    determination; and 
 
  
    a leverage ratio (the ratio of our consolidated indebtedness to
    our consolidated EBITDA, in each case as defined in the credit
    agreement) of not more than 5.0 to 1.0 (or, on a temporary basis
    for not more than three consecutive quarters following the
    consummation of certain acquisitions, not more than 5.5 to 1.0). 
 
   
 
   
 Assumptions
    and Considerations  General
 
   
 57




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Spectra
    Energy Partners
  Our
    Operating Revenue
  
    We estimate that we will generate at least $103.1 million
    in revenues for the twelve months ending June 30, 2008.
    Substantially all of these revenues will be generated from
    services provided under firm transportation and LNG storage
    agreements and capacity reservation charges relating to the East
    Tennessee system. We estimate less than $2.0 million of
    these revenues will be charges based on actual utilization and
    interruptible transportation service. We generated
    $80.0 million and $82.6 million in revenues for the
    years ended December 31, 2005 and 2006, respectively.
    The expected $20.5 million increase in our revenues from
    the year ended December 31, 2006 compared to the twelve
    months ending June 30, 2008 is primarily due to increased
    revenues associated with the Jewell Ridge Lateral, placed in
    service in 2006, as well as increased revenues associated with
    the Patriot Extension, which was placed into service in 2005.  Our
    Expenses
  
    We estimate operating and maintenance expenses will not be more
    than $36.9 million for the twelve months ending
    June 30, 2008, which include certain scheduled pipeline
    integrity expenditures that do not occur annually, as compared
    to $22.9 million and $19.1 million, respectively, for
    the years ended December 31, 2005 and 2006.
    We estimate our total general and administrative expense will
    not be more than $8.5 million, a portion of which will be
    capped pursuant to the terms of the omnibus agreement. Our
    general and administrative expenses will consist of corporate
    general and administrative expense allocated from Spectra Energy
    as well as additional general and administrative costs that
    result from our being a publicly traded limited partnership. Our
    estimated general and administrative expense of
    $8.5 million includes approximately
    $      million of non-cash expense
    related to awards to be granted under our Long-Term Incentive
    Plan. General and administrative expense allocated from Spectra
    Energy was $2.7 million for the calendar year ended
    December 31, 2006. Please read Certain Relationships
    and Related Party Transactions  Omnibus
    Agreement.
    We estimate depreciation and amortization expense for the twelve
    months ending June 30, 2008 for the East Tennessee system
    will be $21.5 million as compared to $23.6 million and
    $19.0 million of depreciation and amortization expense for
    the years ended December 31, 2005 and 2006, respectively.
    Estimated depreciation and amortization expense reflects
    managements estimates, which are based on consistent
    average depreciable asset lives and depreciation methodologies,
    taking into account estimated capital expenditures.
    We estimate property and other taxes for the twelve months
    ending June 30, 2008 will be $7.3 million as compared
    to $5.3 million and $4.2 million for the years ended
    December 31, 2005 and 2006, respectively.  Our
    Capital Expenditures
  
    We estimate that East Tennessees maintenance capital
    expenditures will not exceed $11.8 million for the twelve
    months ending June 30, 2008 as compared to
    $8.2 million and $10.9 million for the years ended
    December 31, 2005 and 2006, respectively. 58




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##### Table of Contents




    We estimate that East Tennessees expansion capital
    expenditures will not exceed $11.8 million for the twelve
    months ending June 30, 2008. Expansion capital expenditures
    for East Tennessee were approximately $51.1 million and
    $75.0 million for the years ended December 31, 2005
    and 2006, respectively, and consisted of expansions associated
    with the Jewell Ridge Lateral and other projects. The increased
    revenue from these projects is reflected in the twelve months
    ending June 30, 2008. Organic growth opportunities
    associated with the Jewell Ridge Lateral constitute the majority
    of the expansion capital expenditures planned for the twelve
    months ending June 30, 2008.  Our
    Financing
 
  
    We estimate that at closing of this offering we will enter into
    a new $500 million credit facility and borrow
    $125 million in revolving debt and $200 million in
    term debt. We estimate that the revolving borrowings will bear a
    variable average interest rate of 6.0%. 
 
  
    We estimate that our term debt borrowings, net of interest
    earned on the $200 million in U.S. Treasury and other
    qualifying securities pledged to secure the loan, will bear an
    interest expense of 0.25%. 
  
    We estimate that East Tennessees $150 million senior
    notes will remain outstanding and continue to bear interest at
    5.71%.
    We estimate our capital expenditures and capital contribution
    requirements will total approximately $81 million and will
    be funded through borrowings under our new $500 million
    credit facility at a variable average interest rate of 6.0%.
    We estimate that we will remain in compliance with the financial
    covenants in our existing and future debt agreements during the
    twelve months ending June 30, 2008.  Our
    Regulatory, Industry and Economic Factors
  
    We estimate there will not be any new federal, state or local
    regulations of portions of the energy industry in which we
    operate, or any new interpretations of existing regulations,
    that will be materially adverse to our business during the
    twelve months ending June 30, 2008.
    We estimate there will not be any major adverse changes in the
    portions of the energy industry in which we operate or in
    general economic conditions during the twelve months ending
    June 30, 2008.
    We estimate that industry, insurance and overall economic
    conditions will not change substantially during the twelve
    months ending June 30, 2008.  Our Cash
    Distributions from Gulfstream and Market Hub
  
    Our estimate reflects cash distributions relating to our 24.5%
    interest in Gulfstream and our 50.0% interest in Market Hub.
    Under the terms of their limited liability company agreements,
    each of Gulfstream and Market Hub must distribute to their
    members on a quarterly basis 100% of their available cash, which
    is generally defined as cash on hand at the end of the
    applicable quarter, less any reserves taken by the management
    committee. As a result, we estimate that we will receive 24.5%
    and 50.0% of the available cash of Gulfstream and Market Hub,
    respectively, during the twelve months ending June 30,
    2008. Based on our assumptions regarding the revenues, expenses
    and other capital requirements discussed below, we estimate
    receiving cash distributions of approximately $23.8 million
    from Gulfstream and approximately $32.9 million from Market
    Hub during the twelve months ending June 30, 2008.  Gulfstream
    System
   59




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Gulfstream
    Operating Revenue
  
    We estimate that Gulfstream will generate at least
    $155.3 million in firm service revenues for the twelve
    months ending June 30, 2008 related to services provided
    under firm transportation agreements. Gulfstream generated
    $121.5 million and $157.9 million in revenues related
    to these agreements for the years ended December 31, 2005
    and 2006, respectively. We do not anticipate that Gulfstream
    will receive any revenues from its Phase III and
    Phase IV expansions during the twelve months ending
    June 30, 2008.
    We estimate that Gulfstream will generate revenues for the
    twelve months ending June 30, 2008 of at least
    $27.1 million related to interruptible transportation and
    park and loan service on estimated throughput of 48 Bcf.
    Gulfstream generated $23.6 million and $22.2 million
    in revenues related to interruptible transportation and park and
    loan services on throughput of 32 Bcf and 35 Bcf for
    the years ended December 31, 2005 and 2006, respectively.
    This increase in Gulfstreams interruptible transportation
    and park and loan services revenue is primarily attributable to
    currently identified increased customer demand.  Gulfstream
    Expenses
  
    We estimate Gulfstreams direct operating and maintenance
    expense will not be more than $16.3 million for the twelve
    months ending June 30, 2008, and includes certain scheduled
    asset integrity expenditures which do not occur annually, as
    compared to $9.3 million and $15.2 million for the
    calendar years ended December 31, 2005 and 2006,
    respectively. Operating expenses exclude capital expenditure
    provisions on development projects.
    We estimate Gulfstreams depreciation and amortization
    expense will be no more than $30.3 million for the twelve
    months ending June 30, 2008. This expense was
    $29.2 million and $30.4 million for the calendar years
    ended December 31, 2005 and 2006, respectively. Estimated
    depreciation and amortization expense reflects managements
    estimates, which are based on consistent average depreciable
    asset lives and depreciation methodologies, taking into account
    estimated capital expenditures as described below.
    We estimate property and other taxes for the twelve months
    ending June 30, 2008 will be $17.8 million as compared
    to $15.1 million and $17.9 million for the years ended
    December 31, 2005 and 2006, respectively.  Gulfstream
    Capital Expenditures
  
    We estimate that Gulfstreams maintenance capital
    expenditures will not exceed $1.8 million for the twelve
    months ending June 30, 2008 as compared to
    $1.0 million and $0.6 million for the years ended
    December 31, 2005 and 2006, respectively.
    We estimate that Gulfstreams net cash expansion capital
    expenditures will not exceed $152.2 million for the twelve
    months ending June 30, 2008 as compared to
    $61.2 million and $21.0 million for the years ended
    December 31, 2005 and 2006, respectively. Our 24.5% share
    of Gulfstreams net cash expansion capital expenditures for
    the twelve months ending June 30, 2008 will be
    $37.3 million.
    The majority of Gulfstreams expansion capital expenditures
    for the twelve months ending June 30, 2008 will be
    associated with its estimated $134.9 million Phase III
    project and its estimated $117.1 million Phase IV
    Project. These projects are expected to be phased in beginning
    in summer 2008 and completed in early 2009, and have
    applications pending with FERC for approval. The capital
    expenditures associated with Phase III and IV totaled
    $12.0 million through December 31, 2006. Both of these
    expansions are fully-supported by customer contracts with
    23-year
    initial terms. These two projects will significantly increase
    Gulfstreams firm transportation service contracts and will
    significantly decrease Gulfstreams reliance on seasonal,
    interruptible transportation service. 60




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##### Table of Contents



Market
    Hub System
    Market
    Hub Operating Revenue
  
    We estimate that Market Hub will generate at least
    $84.9 million in total revenues related to services
    provided under firm and interruptible storage agreements for the
    twelve months ending June 30, 2008. Market Hub generated
    $77.9 million and $78.8 million in revenues related to
    those services for the years ended December 31, 2005 and
    2006, respectively. This increase in revenues is primarily
    attributable to higher average storage rates.
    Included in the storage service revenues above, we estimated
    that Market Hub will generate revenues of $9.4 million
    related to interruptible storage services for the twelve months
    ending June 30, 2008. Market Hub generated
    $14.3 million and $10.2 million in revenues related to
    these services for the years ended December 31, 2005 and
    2006, respectively.  Market
    Hub Expenses
  
    We estimate that Market Hubs operating and maintenance
    expenses will not be more than $11.7 million for the twelve
    months ending June 30, 2008, which includes certain
    scheduled asset integrity expenditures that will not occur
    annually, as compared to $9.5 million and
    $26.3 million for the years ended December 31, 2005
    and 2006, respectively. The increase in operating and
    maintenance expenses from $9.5 million in 2005 to
    $26.3 million in 2006 was attributable to a natural gas
    inventory adjustment as well as expenses associated with two
    unit overhauls and an information technology upgrade.
    We estimate that Market Hubs depreciation and amortization
    expense will be no more than $8.3 million as compared to
    $6.9 and $7.8 million of depreciation and amortization
    expense for the years ended December 31, 2005 and 2006,
    respectively. Estimated depreciation and amortization expense
    reflects managements estimates, which are based on
    consistent average depreciable asset lives and depreciation
    methodologies, taking into account estimated capital
    expenditures as described below.
    We estimate property and other taxes for the twelve months
    ending June 30, 2008 will be $4.4 million as compared
    to $3.4 million and $4.0 million for the years ended
    December 31, 2005 and 2006, respectively.  Market
    Hub Capital Expenditures
  
    We estimate that Market Hubs maintenance capital
    expenditures will not exceed $2.9 million for the twelve
    months ending June 30, 2008, as compared to
    $27.6 million and $9.5 million for the years ended
    December 31, 2005 and 2006, respectively. This decrease is
    primarily attributable to the substantial completion of repairs
    at Moss Bluff following a fire at a cavern well-head in 2004.
    As a result of ongoing expansion projects, we estimate that
    Market Hubs expansion capital expenditures will increase
    to approximately $68.2 million for the twelve months ending
    June 30, 2008, as compared to $10.4 million and
    $44.6 million for the years ended December 31, 2005
    and 2006, respectively. Expansion projects are currently being
    pursued at Market Hubs Egan, Louisiana storage facility to
    increase its aggregate working gas storage capacity from its
    current capacity of 20 Bcf to 24 Bcf by 2008. An
    application is currently pending with FERC for approval to
    further expand Egan to 32 Bcf by 2012. Our 50.0% share of
    Market Hubs net cash expansion capital expenditures for
    the twelve months ending June 30, 2008 will be
    $34.1 million. 61




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##### Table of Contents



Payments
    of Distributions on Common Units, Subordinated Units and the
    General Partner Units
 
   
   62




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##### Table of Contents



PROVISIONS
    OF OUR PARTNERSHIP AGREEMENT
    RELATING TO CASH DISTRIBUTIONS   Distributions
    of Available Cash  General.
  Definition of Available Cash.
  
    less the amount of cash reserves established by our general
    partner to:  
    provide for the proper conduct of our business;
    comply with applicable law, any of our debt instruments or other
    agreements; or
    provide funds for distributions to our unitholders and to our
    general partner for any one or more of the next four quarters;  
    plus, if our general partner so determines, all or a portion of
    cash on hand on the date of determination of available cash for
    the quarter. 
  Minimum Quarterly Distribution.
 
  General Partner Interest and Incentive Distribution
    Rights.
   63




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##### Table of Contents



Operating
    Surplus and Capital Surplus  General.
  Operating Surplus.
  
    an amount equal to two times the amount needed for any one
    quarter for us to pay a distribution on all of our units
    (including the general partner units) and the incentive
    distribution rights at the same
    per-unit
    amount as was distributed in the immediately preceding quarter;
    plus
    all of our cash receipts after the closing of this offering,
    excluding cash from interim capital transactions, as defined
    below under  Capital Surplus; less
    all of our operating expenditures after the closing of this
    offering, excluding the repayment of borrowings, but including
    maintenance capital expenditures (including capital
    contributions to Gulfstream and Market Hub to be used by them
    for maintenance capital expenditures); less
    the amount of cash reserves established by our general partner
    to provide funds for future operating expenditures.    
    payments of principal of and premium on indebtedness;
    expansion capital expenditures;
    payment of transaction expenses (including taxes) related to
    interim capital transactions;
    distributions to our partners; and
    non-pro rata purchases of units of any class made with the
    proceeds of an interim capital transaction (as defined below).    Capital Surplus.
  
    borrowings;
    sales of our equity and debt securities; and 64




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##### Table of Contents




    sales or other dispositions of assets for cash, other than
    inventory, accounts receivable and other current assets sold in
    the ordinary course of business or as part of normal retirement
    or replacement of assets.
    the termination of interest rate swap agreements or commodity
    hedge contracts prior to the termination date specified therein;
    capital contributions received; and
    corporate reorganizations or restructurings.  Characterization of Cash
    Distributions. per-unit
 Subordination
    Period  General.
  Subordination Period.
  
    distributions of available cash from operating surplus on each
    of the outstanding common units, subordinated units and general
    partner units equaled or exceeded the minimum quarterly
    distribution for each of the three consecutive, non-overlapping
    four-quarter periods immediately preceding that date;
    the adjusted operating surplus (as defined below)
    generated during each of the three consecutive, non-overlapping
    four-quarter periods immediately preceding that date equaled or
    exceeded the sum of the minimum quarterly distributions on all
    of the outstanding common units, subordinated units and general
    partner units during those periods on a fully diluted
    basis; and
    there are no arrearages in payment of the minimum quarterly
    distribution on the common units.  Expiration of the Subordination
    Period.
 65




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##### Table of Contents




    the subordination period will end and each subordinated unit
    will immediately convert into one common unit;
    any existing arrearages in payment of the minimum quarterly
    distribution on the common units will be extinguished; and
    the general partner will have the right to convert its general
    partner units and its incentive distribution rights into common
    units or to receive cash in exchange for those interests.  Early Conversion of Subordinated
    Units. one-for-one
  
    distributions of available cash from operating surplus on each
    outstanding common unit, subordinated unit and general partner
    unit equaled or exceeded $0.4875 per quarter (150% of the
    annualized minimum quarterly distribution) for the four-quarter
    period immediately preceding the date;
    the adjusted operating surplus (as defined below)
    generated during the four-quarter period immediately preceding
    the date equaled or exceeded the sum of the distribution of
    $0.4875 (150% of the minimum quarterly distribution) on all of
    the outstanding common units, subordinated units and general
    partner units during that period on a fully diluted
    basis; and
    there are no arrearages in payment of the minimum quarterly
    distribution on the common units.  Adjusted Operating Surplus.
  
    operating surplus generated with respect to that period; plus
    any net decrease made in subsequent periods in cash reserves for
    operating expenditures initially established with respect to
    that period to the extent such decrease results in a reduction
    in adjusted operating surplus in subsequent periods pursuant to
    the following bullet point; less
    any net decrease in cash reserves for operating expenditures
    with respect to that period not relating to an operating
    expenditure made with respect to that period; plus
    any net increase in cash reserves for operating expenditures
    with respect to that period required by any debt instrument for
    the repayment of principal, interest or premium. Distributions
    of Available Cash from Operating Surplus during the
    Subordination Period    
    first, 98% to the common unitholders, pro rata, and 2% to
    the general partner, until we distribute for each outstanding
    common unit an amount equal to the minimum quarterly
    distribution for that quarter;
    second, 98% to the common unitholders, pro rata, and 2%
    to the general partner, until we distribute for each outstanding
    common unit an amount equal to any arrearages in payment of the
    minimum quarterly distribution on the common units for any prior
    quarters during the subordination period;
    third, 98% to the subordinated unitholders, pro rata, and
    2% to the general partner, until we distribute for each
    subordinated unit an amount equal to the minimum quarterly
    distribution for that quarter; and 66




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##### Table of Contents




    thereafter, in the manner described in General
    Partner Interest and Incentive Distribution Rights below.   Distributions
    of Available Cash from Operating Surplus after the Subordination
    Period    
    first, 98% to all unitholders, pro rata, and 2% to the
    general partner, until we distribute for each outstanding unit
    an amount equal to the minimum quarterly distribution for that
    quarter; and
    thereafter, in the manner described in General
    Partner Interest and Incentive Distribution Rights below.   General
    Partner Interest and Incentive Distribution Rights          
    we have distributed available cash from operating surplus to the
    common and subordinated unitholders in an amount equal to the
    minimum quarterly distribution; and
    we have distributed available cash from operating surplus on
    outstanding common units in an amount necessary to eliminate any
    cumulative arrearages in payment of the minimum quarterly
    distribution;    
    first, 98% to all unitholders, pro rata, and 2% to the
    general partner, until each unitholder receives a total of
    $0.3738 per unit for that quarter (the first target
    distribution);
    second, 85% to all unitholders, pro rata, and 15% to the
    general partner, until each unitholder receives a total of
    $0.4063 per unit for that quarter (the second target
    distribution); 67




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##### Table of Contents




    third, 75% to all unitholders, pro rata, and 25% to the
    general partner, until each unitholder receives a total of
    $0.4875 per unit for that quarter (the third target
    distribution); and
    thereafter, 50% to all unitholders, pro rata, and 50% to
    the general partner. Percentage
    Allocations of Available Cash from Operating Surplus    Marginal PercentageTotal Quarterly

Interest in DistributionDistribution per Unit




GeneralTarget Amount

Unitholders


PartnerMinimum Quarterly Distribution

$0.325


98
%


2
%First Target Distribution

Up to $0.3738


98
%


2
%Second Target Distribution

above $0.3738 up to $0.4063


85
%


15
%Third Target Distribution

above $0.4063 up to $0.4875


75
%


25
%Thereafter

above $0.4875


50
%


50
%  General
    Partners Right to Reset Incentive Distribution
    Levels     68




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##### Table of Contents




    first, 98% to all unitholders, pro rata, and 2% to the general
    partner, until each unitholder receives an amount equal to 115%
    of the reset minimum quarter distribution for that quarter;
    second, 85% to all unitholders, pro rata, and 15% to the general
    partner, until each unitholder receives an amount per unit equal
    to 125% of the reset minimum quarterly distribution for that
    quarter;
    third, 75% to all unitholders, pro rata, and 25% to the general
    partner, until each unitholder receives an amount per unit equal
    to 150% of the reset minimum quarterly distribution for that
    quarter; and
    thereafter, 50% to all unitholders, pro rata, and 50% to the
    general partner.    Marginal PercentageQuarterly Distribution

Interest in Distribution


Quarterly Distributionper Unit




General


per Unit followingPrior to Reset

Unitholders


Partner


Hypothetical ResetMinimum Quarterly Distribution

$0.325


98
%


2
%

$0.60First Target Distribution

Up to $0.3738


98
%


2
%

Up to $0.69(1)Second Target Distribution

above $0.3738 up to $0.4063


85
%


15
%

above $0.69 up to $0.75(2)Third Target Distribution

above $0.4063 up to $0.4875


75
%


25
%

above $0.75 up to $0.90(3)Thereafter

above $0.4875


50
%


50
%

above $0.90(3)     (1)
    
    This amount is 115% of the hypothetical reset minimum quarterly
    distribution.(2)
    
    This amount is 125% of the hypothetical reset minimum quarterly
    distribution.(3)
    
    This amount is 150% of the hypothetical reset minimum quarterly
    distribution. 69




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##### Table of Contents



Quarterly

Common


General Partner Cash Distributions Prior to ResetDistribution

Unitholders Cash





2% Generalper Unit

Distributions


Class B


Partner








TotalPrior to Reset

Prior to Reset


Units


Interest


IDRs


Total


DistributionsMinimum Quarterly Distribution

$0.325

$
19,936,175


$
0


$
406,861


$
0


$
406,861


$
20,343,036First Target Distribution

up to $0.3738


2,993,493



0



61,092



0



61,092



3,054,585Second Target Distribution

above $0.3738 up to $0.4063


1,993,617



0



46,909



304,906



351,815



2,345,432Third Target Distribution

above $0.4063 up to $0.4875


4,980,977



0



132,826



1,527,500



1,660,326



6,641,303Thereafter

above $0.4875


6,900,984



0



276,039



6,624,944



6,900,984



13,801,967$
36,805,246


$
0


$
923,727


$
8,457,350


$
9,381,078


$
46,186,323     General Partner Cash DistributionsQuarterly

Common


After ResetDistribution

Unitholders Cash





2% Generalper

Distributions


Class B


Partner








TotalUnit After Reset

After Reset


Units


Interest


IDRs


Total


DistributionsMinimum Quarterly Distribution

$0.60

$
36,805,246


$
8,457,350


$
923,727


$
0


$
9,381,077


$
46,186,323First Target Distribution

up to $0.69






















Second Target Distribution

above $0.69 up to $0.75






















Third Target Distribution

above $0.75 up to $0.90






















Thereafter

above $0.90

$
36,805,246


$
8,457,350


$
923,727


$
0


$
9,381,077


$
46,186,323    Distributions
    from Capital Surplus  How Distributions from Capital Surplus Will Be
    Made.
  
    first, 98% to all unitholders, pro rata, and 2% to the
    general partner, until we distribute for each common unit that
    was issued in this offering an amount of available cash from
    capital surplus equal to the initial public offering price; 70




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##### Table of Contents




    second, 98% to the common unitholders, pro rata, and 2%
    to the general partner, until we distribute for each common unit
    an amount of available cash from capital surplus equal to any
    unpaid arrearages in payment of the minimum quarterly
    distribution on the common units; and
    thereafter, we will make all distributions of available
    cash from capital surplus as if they were from operating surplus.  Effect of a Distribution from Capital
    Surplus.
   Adjustment
    to the Minimum Quarterly Distribution and Target Distribution
    Levels    
    the minimum quarterly distribution;
    target distribution levels;
    the unrecovered initial unit price; and
    the number of common units into which a subordinated unit is
    convertible.  two-for-one
   71




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Distributions
    of Cash Upon Liquidation  General.
    Manner of Adjustments for Gain.
  
    first, to the general partner and the holders of units who have
    negative balances in their capital accounts to the extent of and
    in proportion to those negative balances;
    second, 98% to the common unitholders, pro rata, and 2% to the
    general partner, until the capital account for each common unit
    is equal to the sum of: (1) the unrecovered initial unit
    price; (2) the amount of the minimum quarterly distribution
    for the quarter during which our liquidation occurs; and
    (3) any unpaid arrearages in payment of the minimum
    quarterly distribution;
    third, 98% to the subordinated unitholders, pro rata, and 2% to
    the general partner until the capital account for each
    subordinated unit is equal to the sum of: (1) the
    unrecovered initial unit price; and (2) the amount of the
    minimum quarterly distribution for the quarter during which our
    liquidation occurs;
    fourth, 98% to all unitholders, pro rata, and 2% to the general
    partner, until we allocate under this paragraph an amount per
    unit equal to: (1) the sum of the excess of the first
    target distribution per unit over the minimum quarterly
    distribution per unit for each quarter of our existence; less
    (2) the cumulative amount per unit of any distributions of
    available cash from operating surplus in excess of the minimum
    quarterly distribution per unit that we distributed 98% to the
    unitholders, pro rata, and 2% to the general partner, for each
    quarter of our existence;
    fifth, 85% to all unitholders, pro rata, and 15% to the general
    partner, until we allocate under this paragraph an amount per
    unit equal to: (1) the sum of the excess of the second
    target distribution per unit over the first target distribution
    per unit for each quarter of our existence; less (2) the
    cumulative amount per unit of any distributions of available
    cash from operating surplus in excess of the first target
    distribution per unit that we distributed 85% to the
    unitholders, pro rata, and 15% to the general partner for each
    quarter of our existence;
    sixth, 75% to all unitholders, pro rata, and 25% to the general
    partner, until we allocate under this paragraph an amount per
    unit equal to: (1) the sum of the excess of the third
    target distribution per unit over the second target distribution
    per unit for each quarter of our existence; less (2) the
    cumulative amount per unit of any distributions of available
    cash from operating surplus in excess of the second target
    distribution per unit that we distributed 75% to the
    unitholders, pro rata, and 25% to the general partner for each
    quarter of our existence; and
    thereafter, 50% to all unitholders, pro rata, and 50% to the
    general partner. 72




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Manner of Adjustments for Losses.
  
    first, 98% to holders of subordinated units in proportion to the
    positive balances in their capital accounts and 2% to the
    general partner, until the capital accounts of the subordinated
    unitholders have been reduced to zero;
    second, 98% to the holders of common units in proportion to the
    positive balances in their capital accounts and 2% to the
    general partner, until the capital accounts of the common
    unitholders have been reduced to zero; and
    thereafter, 100% to the general partner.    Adjustments to Capital Accounts.
 73




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##### Table of Contents



SELECTED
    HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA   
   
   
  
    East Tennessees and Market Hubs distribution of
    accounts receivable of $9.1 million and $12.1 million
    ($6.0 million, net to our interest), respectively, Spectra
    Energy Corp; 
  
    The proceeds to Spectra Energy Partners LP from the issuance and
    sale of 11.5 million common units at an initial offering
    price of $20.00 per unit; 
 
  
    Spectra Energy Partners borrowings under a new
    $500 million credit facility of $200 million in term
    debt and $125 million in revolving debt; and 
 
  
    Spectra Energy Partners use of proceeds and borrowings to
    pay transaction expenses and underwriting commissions, replenish
    working capital, and invest in U.S. Treasury and other
    qualifying securities. 
    
    Our historical and pro forma Adjusted EBITDA;
    Adjusted EBITDA for both our 24.5% ownership interest in
    Gulfstream and our 50.0% ownership interest in Market Hub;
    Our historical and pro forma cash available for
    distribution; and
    Cash available for distribution for both our 24.5% ownership
    interest in Gulfstream and our 50.0% ownership interest in
    Market Hub.   74




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##### Table of Contents



Spectra EnergyPartners, LPPro FormaSpectra Energy Partners Predecessor Combined


Year EndedYear Ended December 31,


December 31,2002


2003


2004


2005


2006


2006(In thousands except per unit and operating data)Statement of
    Operations:Total operating revenues

$
58,442


$
65,865


$
81,716


$
80,003


$
82,609


$
82,609Operating expenses:Operations, maintenance, and other


11,613



19,032



26,081



24,648



21,831



21,831Depreciation and amortization


14,577



15,804



21,492



23,640



18,986



18,986Property and other taxes


3,661



4,318



518



5,264



4,177



4,177Total operating and expenses


29,851



39,154



48,091



53,552



44,994



44,994Gain on sale of other assets, net






(161
)














Operating income


28,591



26,550



33,625



26,451



37,615



37,615Equity in earnings of
    unconsolidated affiliates


35,428



28,367



35,495



46,287



41,105



41,105Other income (expense), net


3,123



7,983



1,485



528



1,765



1,765Interest income


17,651



11



6



24



15



10,615Interest expense


(17,839
)


(6,203
)


(8,258
)


(8,506
)


(8,151
)


(26,951
)Income tax expense


(11,539
)


(6,048
)


(9,202
)


(7,834
)


(10,741
)


(453
)Net income

$
55,415


$
50,660


$
53,151


$
56,950


$
61,608


$
63,696Net income per limited
    partners unitCommon units





















$
1.30Subordinated units





















$
0.45Balance Sheet Data (at period end):Total assets

$
1,081,254


$
1,258,141


$
1,302,974


$
1,202,772


$
1,284,582


$
1,473,465Property, plant and equipment, net


433,244



566,697



602,226



616,316



691,820



691,820Investment in unconsolidated
    affiliates


511,240



531,956



553,731



422,340



442,793



431,081Long-term debt


150,000



150,000



150,000



150,000



150,000



475,000Total parent net equity


878,203



1,021,321



1,024,754



895,696



989,125



967,400  
 75




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##### Table of Contents



Spectra EnergyPartners, LPSpectra Energy


Pro FormaPartners Predecessor Combined


Year EndedYear Ended December 31,


December 31,2004


2005


2006


2006(In thousands except per unit and operating data)Other Financial Data:Spectra Energy PartnersNet cash provided by operating
    activities

$
83,987


$
93,272


$
62,278


$
64,741Adjusted EBITDA


55,117



50,091



56,601



56,601Incremental general and
    administrative expense of being a publicly-traded partnership














5,500
(b)Net cash paid for interest expense


12,955



8,566



8,591



16,591Maintenance capital expenditures


6,679



8,232



10,933



10,933Cash available for distribution(a)


73,784



77,526



80,377



66,877Expansion capital expenditures


27,590



51,083



74,977



74,977Gulfstream  our 24.5%Net cash provided by operating
    activities

$
18,771


$
24,999


$
24,712Adjusted EBITDA


18,699



29,583



36,060Net cash paid for interest expense


1,555



3,869



12,109Maintenance capital expenditures


47



234



151Cash available for distribution(a)


17,097



25,480



23,800Expansion capital expenditures


30,356



15,000



5,149Market Hub  our 50.0%Net cash provided by operating
    activities

$
21,452


$
31,139


$
84,386Adjusted EBITDA


27,027



32,552



24,286Net cash paid for interest expense










22Maintenance capital expenditures


5,823



13,799



4,763Cash available for distribution(a)


21,204



18,753



19,500Expansion capital expenditures


2,677



5,195



22,279Operating Data:East TennesseeTransportation capacity (Bcf/d)


1.263



1.280



1.319Contracted firm capacity (Bcf/d)


1.147



1.114



1.183Transported volumes (Bcf)


121.7



133.1



143.7Gulfstream  100%
    basisTransportation capacity (Bcf/d)


1.063



1.063



1.063Contracted firm capacity (Bcf/d)


0.296



0.731



0.731Transported volumes (Bcf)


110.7



179.7



251.3Market Hub  100%
    basisStorage capacity (Bcf)


28.7



29.8



34.8  
    (a)
    
    Cash available for distribution of Spectra Energy Partners
    includes the cash available for distribution from Gulfstream and
    Market Hub.(b)
    
    Upon completion of this offering, we anticipate incurring
    incremental general and administrative expense of approximately
    $5.5 million per year as a result of being a
    publicly-traded limited partnership. The unaudited pro forma
    combined financial statements do not reflect these expenses. 76




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##### Table of Contents



Non-GAAP Financial
    Measures   
 
   
        
    the financial performance of our assets without regard to
    financing methods, capital structure or historical cost basis;
    the ability of our assets to generate cash sufficient to pay
    interest on our indebtedness and to make distributions to our
    partners; and
    our operating performance and return on invested capital as
    compared to those of other publicly traded limited partnerships
    that own energy infrastructure assets, without regard to their
    financing methods and capital structure.   77




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##### Table of Contents



Spectra EnergyPartners, LPPro FormaSpectra Energy Partners Predecessor Combined


Year EndedYear Ended December 31,


December 31,2004


2005


2006


2006(In thousands)Spectra Energy
    PartnersReconciliation of Non-GAAP
    Adjusted EBITDA and Cash Available for
    Distribution to GAAP Net
    IncomeNet income

$
53,151


$
56,950


$
61,608


$
63,696Add:Interest expense


8,258



8,506



8,151



26,951Income tax expense


9,202



7,834



10,741



453Depreciation and amortization


21,492



23,640



18,986



18,986Less:Interest income


6



24



15



10,615Equity in earnings of Gulfstream


11,081



16,611



16,763



16,763Equity in earnings of Market Hub


24,414



29,676



24,342



24,342Other income, net


1,485



528



1,765



1,765Adjusted EBITDA

$
55,117


$
50,091


$
56,601


$
56,601Add:Cash available for distribution
    from Gulfstream


17,097



25,480



23,800



23,800Cash available for distribution
    from Market Hub


21,204



18,753



19,500



19,500Less:Incremental general and
    administrative expense of being a public company














5,500Net cash paid for interest expense
    (income), net


12,955



8,566



8,591



16,591Maintenance capital expenditures


6,679



8,232



10,933



10,933Cash available for
    distribution

$
73,784


$
77,526


$
80,377


$
66,877Reconciliation of Non-GAAP
    Adjusted EBITDA and Cash Available for
    Distribution to GAAP Net cash provided by operating
    activitiesNet cash provided by operating
    activities

$
83,987


$
93,272


$
62,278


$
64,741Interest income


(6
)


(24
)


(15
)


(10,615
)Interest expense


8,258



8,506



8,151



26,951Income taxes


(21,964
)


3,465



(2,072
)


(12,360
)Distributions received from Market
    Hub














Distributions received from
    Gulfstream


(13,720
)


(29,645
)


(20,335
)


(20,335
)Other


0



36



314



314Changes in operating working
    capital:Accounts receivable


848



(934
)


(49
)


(49
)Other current assets


6,294



(6,189
)


878



878Accounts payable


4,787



(1,687
)


798



798Taxes accrued


(17,694
)


(7,527
)


3,345



3,345Other current liabilities


3,197



(1,617
)


8,927



8,552Other, including changes in
    noncurrent assets and liabilities


1,130



(7,565
)


(5,619
)


(5,619
)Adjusted EBITDA

$
55,117


$
50,091


$
56,601


$
56,601Add:Cash available for distribution
    from Gulfstream


17,097



25,480



23,800



23,800Cash available for distribution
    from Market Hub


21,204



18,753



19,500



19,500Less:Incremental general and
    administrative expense of being a public company














5,500Net cash paid for interest expense
    (income), net


12,955



8,566



8,591



16,591Maintenance capital expenditures


6,679



8,232



10,933



10,933Cash available for
    distribution

$
73,784


$
77,526


$
80,377


$
66,877  
 78




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##### Table of Contents



GulfstreamYear Ended December 31,2004


2005


2006(In thousands)GulfstreamReconciliation of non-GAAP
    Adjusted EBITDA and Cash Available for
    Distribution to GAAP Net
    IncomeNet income

$
45,228


$
67,800


$
68,422Add:Interest expense


9,092



25,540



48,787Depreciation and amortization


25,354



29,190



30,406Less:Other income, net


3,353



1,783



431Adjusted EBITDA 
    100%

$
76,321


$
120,747


$
147,184Adjusted EBITDA  our
    24.5%

$
18,699


$
29,583


$
36,060Less:Net cash paid for interest expense


6,349



15,794



49,423Maintenance capital expenditures


190



955



617Cash available for
    distribution  100%

$
69,782


$
103,998


$
97,144Cash available for
    distribution  our 24.5%

$
17,097


$
25,480


$
23,800Reconciliation of Non-GAAP
    Adjusted EBITDA and Cash Available for
    Distribution to GAAP Net cash provided by operating
    activitiesNet cash provided by operating
    activities

$
76,617


$
111,858


$
107,083Interest expense


9,092



25,540



48,787Other


(5,571
)


(4,962
)


493Changes in operating working
    capital:Accounts receivable


(420
)


9,698



(3,772
)Other current assets


(3,575
)


143



545Accounts payable


(102
)


2,066



(994
)Accrued taxes


1,264



(4,861
)


(8,050
)Accrued interest


(1,573
)


(6,709
)


687Accrued liabilities


172



(5,830
)


875Fuel tracker liabilities






(2,962
)


2,260Other current liabilities


(223
)


(2,940
)


(3,197
)Other, including changes in
    noncurrent assets and liabilities


640



(294
)


2,467Adjusted EBITDA 
    100%

$
76,321


$
120,747


$
147,184Adjusted EBITDA  our
    24.5%

$
18,699


$
29,583


$
36,060Less:Net cash paid for interest expense


6,349



15,794



49,423Maintenance capital expenditures


190



955



617Cash available for
    distribution  100%

$
69,782


$
103,998


$
97,144Cash available for
    distribution  our 24.5%

$
17,097


$
25,480


$
23,800  
 
 
 79




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Market HubYear ended December 31,2004


2005


2006(In thousands)Market HubReconciliation of Non-GAAP
    Adjusted EBITDA and Cash Available for
    Distribution to GAAP Net
    IncomeNet income

$
48,829


$
59,353


$
48,684Add:Interest expense










2,636Depreciation and amortization


6,788



6,938



7,815Less:Interest income


30



41



11Other income, net


1,533



1,146



10,553Adjusted EBITDA 
    100%

$
54,054


$
65,104


$
48,571Adjusted EBITDA  our
    50.0%

$
27,027


$
32,552


$
24,286Less:Net cash paid for interest expense










43Maintenance capital expenditures


11,646



27,599



9,528Cash available for
    distribution  100%

$
42,408


$
37,505


$
39,000Cash available for
    distribution  our 50.0%

$
21,204


$
18,753


$
19,500Reconciliation of Non-GAAP
    Adjusted EBITDA and Cash Available for
    Distribution to GAAP Net cash provided by operating
    activitiesNet cash provided by operating
    activities

$
42,904


$
62,278


$
168,771Interest income


(30
)


(41
)


(11
)Interest expense










2,636Other


6



(10
)


Changes in operating working
    capital:Accounts receivable


36,682



(16,306
)


(5,944
)Inventory


808



3,137



(6,113
)Other current assets


(260
)






Accounts payable


(1,593
)


363



(4,804
)Accrued taxes


214



506



(379
)Collateral liabilities


(1,799
)


(491
)


(56,341
)Other accrued liabilities


(22,852
)


14,587



(2,638
)Other, including changes in
    noncurrent assets and liabilities


(26
)


1,081



(46,606
)Adjusted EBITDA 
    100%

$
54,054


$
65,104


$
48,571Adjusted EBITDA  our
    50.0%

$
27,027


$
32,552


$
24,286Less:Net cash paid for interest expense










43Maintenance capital expenditures


11,646



27,599



9,528Cash available for
    distribution  100%

$
42,408


$
37,505


$
39,000Cash available for
    distribution  our 50.0%

$
21,204


$
18,753


$
19,500  
 80




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##### Table of Contents



MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS
  You should read the following discussion of our financial
    condition and results of operations in conjunction with our
    historical consolidated financial statements and notes and our
    pro forma financial statements included elsewhere in this
    prospectus. Because of the significance of our investments in
    Gulfstream and Market Hub, we include separate historical
    financial statements and notes of Gulfstream and Market Hub in
    this prospectus as well as additional discussion of their
    financial condition and results of operations presented below.
    You should read this analysis in conjunction with the historical
    financial statements of Gulfstream and Market Hub and the notes
    to those financial statements found elsewhere in this
    prospectus.
 Overview    
    East Tennessee System.  We own and
    operate 100% of the approximately
    1,400-mile
    East Tennessee interstate natural gas transportation system,
    which extends from central Tennessee eastward into southwest
    Virginia and northern North Carolina, and southward into
    northern Georgia. East Tennessee also owns and operates an LNG
    storage facility in Kingsport, Tennessee with working gas
    storage capacity of approximately 1.0 Bcf and
    regasification capability of 150 MMcf/d.
    Gulfstream System.  We own a 24.5%
    interest in the approximately
    690-mile
    Gulfstream interstate natural gas transportation system, which
    extends from Pascagoula, Mississippi and Mobile, Alabama across
    the Gulf of Mexico and into central Florida.
    Market Hub System.  We own a 50.0%
    interest in Market Hub, which owns and operates two
    high-deliverability salt cavern natural gas storage facilities
    located in Louisiana and Texas with aggregate working gas
    storage capacity of approximately 35 Bcf. 
 Our
    Organic Growth Initiatives   
 
  
    East Tennessee System Expansions.  Since
    acquiring East Tennessee in 2000 we have completed expansions
    that have doubled its market delivery capability from
    668 MMcf/d to 1.3 Bcf/d. Our recently completed,
    approximately $300 million Patriot Extension contributed
    approximately 400 MMcf/d of capacity to this total and for
    the first time linked East Tennessee with markets in North
    Carolina and the broader Mid-Atlantic region. The addition of
    this new market has allowed East Tennessee to pursue additional
    greenfield expansions such as the approximately $60 million
    Jewell Ridge Lateral, which added capacity of up to
    228 MMcf/d for delivery of additional Appalachian
    production to East Tennessee customers. Spectra Energy is
    currently evaluating additional storage projects at its
    Saltville storage facility to provide supply flexibility to the
    markets served on each end of the East Tennessee system. We
    believe the East Tennessee expansion projects will offer
    additional organic growth opportunities as those assets are
    further expanded. 
 
  
    Gulfstream System Expansions.  Two
    fully-contracted expansion projects are currently being pursued
    for Gulfstream to increase its utilization and total system
    capacity. The estimated $135 million Phase III project
    will extend the pipeline to a new market, enabling us to fully
    subscribe Gulfstreams existing mainline capacity. The
    estimated $117 million Phase IV project will add
    compression and extend the pipeline to a new market, increasing
    Gulfstreams mainline capacity from 1.1 Bcf/d to
    1.25 Bcf/d by early 2009. Both of these expansions are
    fully-supported by customer contracts with
    23-year
    initial terms and have applications pending with FERC for
    approval. 
 
 81




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##### Table of Contents




    Market Hub System Expansions.  Expansion
    projects are currently being pursued at Market Hubs Egan,
    Louisiana storage facility to increase its aggregate working gas
    storage capacity from its current capacity of 20 Bcf to
    24 Bcf by 2008. An application is currently pending with
    FERC for approval to further expand Egan to 32 Bcf by 2012.
    An expansion is also underway to increase the natural gas
    injection capability of Egan. This estimated $50 million
    expansion will be placed into service during the summer of 2007,
    adding approximately 22,800 horsepower of compression and
    increasing Egans injection capacity by approximately
    0.5 Bcf/d to approximately 1.3 Bcf/d. Our 50% share of
    the remaining expansion costs for all of these projects is
    expected to be approximately $73.8 million. In addition,
    since acquiring Market Hub in 2000, Spectra Energy has expanded
    the storage capacity at Moss Bluff by approximately 4 Bcf
    and is currently considering additional capacity expansions. 
 
   
 Factors
    that Impact our Business   
    Supply
    and Demand Dynamics
 
   
 
 82




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##### Table of Contents



Customers
    Regulation
   How We
    Evaluate Our Operations    
    our contract mix and percentage of physical capacity sold,
    particularly the component of services that we provide under
    firm and interruptible contracts;
    our operating, general and administrative expenses;
    our Adjusted EBITDA; and
    our estimated cash available for distribution.  Contract
    Mix and Percentage of Physical Capacity Sold
   83




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##### Table of Contents



% of PhysicalRevenue Composition %





CapacityFirm Contracts





Subscribed


Weighted AverageCapacity


Variable


Interruptible


Under Firm


Remaining ContractAsset

Our Ownership %


Reservation Fees


Fees


Contracts


Contracts


Life (in years)(1)East Tennessee


100.0
%


97.7
%


1.7
%


0.6
%


89.7
%


9.3Gulfstream


24.5
%


85.6
%


2.9
%


11.5
%


68.7
%


20.2Market Hub


50.0
%


90.0
%


0.0
%


10.0
%


100.0
%


2.4     (1)
    
    The average life of each contract is calculated based on the
    average annual contract revenue for such contracts
    remaining life.  and/or
    Operating,
    General and Administrative Expenses
    Adjusted
    EBITDA
 
   
 84




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##### Table of Contents




    the financial performance of our assets without regard to
    financing methods, capital structure or historical cost basis;
    the ability of our assets to generate cash sufficient to pay
    interest on our indebtedness and to make distributions to our
    partners; and
    our operating performance and return on invested capital as
    compared to those of other publicly traded limited partnerships
    that own energy infrastructure assets, without regard to their
    financing methods and capital structure.  Cash
    Available for Distribution
         85




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##### Table of Contents



Results
    of Operations  Combined Overview    
 Year Ended December 31,2004


2005


2006(In thousands)Operating RevenuesTransportation of natural gas

$
69,242


$
77,553


$
80,531Transportation of natural gas
     affiliates


9,352



150



46Other


3,122



2,300



2,032Total operating revenues


81,716



80,003



82,609Operating ExpensesOperations, maintenance and other


19,679



16,680



8,970Operations, maintenance and other
     affiliates


6,402



7,968



12,861Depreciation and amortization


21,492



23,640



18,986Property and other taxes


518



5,264



4,177Total operating expenses


48,091



53,552



44,994Operating Income


33,625



26,451



37,615Other Income and
    ExpensesEquity in earnings of
    unconsolidated affiliates


35,495



46,287



41,105Other income and (expenses), net


1,485



528



1,765Total other income and expenses


36,980



46,815



42,870Interest Income


6



24



15Interest Expense


8,258



8,506



8,151Earnings before Income
    Taxes


62,353



64,784



72,349Income Tax Expense


9,202



7,834



10,741Net Income

$
53,151


$
56,950


$
61,608Adjusted EBITDA(a)(b)

$
55,117


$
50,091


$
56,601Cash Available for
    Distribution(b)(c)

$
73,784


$
77,526


$
80,378  
   
  (a)
    
    We define Adjusted EBITDA as net income plus interest expense,
    income taxes and depreciation and amortization less our equity
    in earnings of Gulfstream and Market Hub, interest income, and
    other income (expenses), net, which primarily includes non-cash
    AFUDC and certain other items such as insurance recoveries. 
  (b)
    
    For a reconciliation of this measure to its most directly
    comparable financial measures calculated and presented in
    accordance with GAAP, please see Selected Historical and
    Pro Forma Financial and Operating Data  Non-GAAP
    Financial Measures.(c)
    
    We define cash available for distribution as our Adjusted EBITDA
    plus cash available for distribution from Gulfstream and Market
    Hub, less net cash paid for interest expense and maintenance
    capital expenditures. Our cash available for distribution does
    not reflect changes in working capital balances. 86




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##### Table of Contents



Year
    Ended December 31, 2006 Compared to the Year Ended
    December 31, 2005
  Operating Revenues
  Operating Expenses
  
    the capitalization in 2006 of $11.4 million in development
    costs related to the Jewell Ridge project, approximately
    $5.6 million of which was incurred and recognized as
    operating expense in prior periods;
    a decrease of $5.0 million in depreciation expense due to
    an increase in the estimated useful lives of certain assets, as
    agreed to in a negotiated rate settlement with customers of East
    Tennessee and approved by FERC; partially offset by:  
    a $4.8 million increase in operations costs due to
    overhauls of two compressor units and a $1.2 million
    increase in insurance costs as a result of higher insurance
    market rates; and
    $3.0 million in increased non-recurring allocations from
    Spectra Energy Capital, LLC, or Spectra Energy Capital, related
    to financial re-engineering and other project costs.  Other
    Income and Expenses
  Equity in Earnings of Unconsolidated
    Affiliates
  Other Income and (Expenses), Net
  Income Tax Expense
  Year
    Ended December 31, 2005 Compared to the Year Ended
    December 31, 2004
  Operating Revenues
  Operating Expenses
  
    a $6.0 million increase in project development costs,
    mostly related to the Jewell Ridge project;
    a $4.8 million increase in property and other taxes
    primarily due to an adjustment of tax reserves in 2004
    associated with the resolution of outstanding ad valorem tax
    matters;
    a higher depreciation expense of $1.8 million related to
    the Patriot Extension project that was placed into service;
    partially offset by:
    a $5.2 million net increase of in-kind fuel recoveries from
    customers in 2004 in excess of the cost of compressor fuel
    used; and
    a $2.5 million decrease due to increased capitalized cost
    due to a higher level of construction activity. 87




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##### Table of Contents



Other
    Income and Expense
  Equity in Earnings of Unconsolidated
    Affiliates
  Other Income and (expenses), net
  Income Tax Expense
  Results
    of Operations  Unconsolidated
    Affiliates
    Years Ended December 31,Gulfstream

2004


2005


2006(In thousands)Operating Revenue

$
93,615


$
145,104


$
180,257Operating Expenses


42,648



53,547



63,479Other Income and Expenses


3,353



1,783



431Interest Expense


9,092



25,540



48,787Net Income

$
45,228


$
67,800


$
68,422Our 24.5% share

$
11,081


$
16,611


$
16,763   Year
    Ended December 31, 2006 compared to the Year Ended
    December 31, 2005
    
    a $38.5 million increase in natural gas transportation
    revenues primarily due to a significant new firm transportation
    contract; offset by
    a $3.3 million decrease in other revenue due to lower
    interruptible services;
    a $9.9 million increase in operating and maintenance
    expenses primarily due to $2.9 million of increased
    development costs for Phase III and Phase IV expansion
    projects, and $2.8 million of higher property and liability
    premiums due to increased insurance rates for wind-storm
    insurance coverage, and $2.7 million increase in
    Florida property taxes; and
    a $23.2 million increase in interest expense primarily as a
    result of $850 million in project financing entered into in
    October 2005. 88




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##### Table of Contents



Year
    Ended December 31, 2005 compared to the Year Ended
    December 31, 2004
    
    a $49.9 million increase in natural gas transportation
    revenues primarily due to Phase II firm transportation
    contracts that began in February 2005 when these facilities were
    placed into service, and new interruptible transportation
    contracts; partially offset by:
    $3.8 million increase in depreciation and amortization
    expenses due to the placement of Phase II in-service in
    February 2005;
    $7.2 million increase in property and other taxes due to ad
    valorem tax on Phase II assets placed into service in
    February 2005; and
    $16.4 million increase in interest expense due to debt at
    Gulfstream issued in 2005, described above.  Market
    Hub
 Years Ended December 31,2004


2005


2006(In thousands)Operating Revenue

$
65,843


$
77,929


$
78,804Operating Expenses


18,577



19,763



38,048Other Income and Expenses


1,533



1,146



10,553Interest (Expense)/Income


30



41



(2,625
)Net Income

$
48,829


$
59,353


$
48,684Our 50% share

$
24,415


$
29,677


$
24,342   Year
    Ended December 31, 2006 compared to the Year Ended
    December 31, 2005
    
    an $18.3 million increase in operating expenses primarily
    attributable to a $10.0 million increase in net in-kind
    fuel costs incurred over reimbursements from customers,
    $3.8 million in higher operations costs due to compressor
    overhauls and general maintenance and a $1.2 million
    increase in corporate cost allocations; partially offset by:
    a $9.4 million net increase in gains from asset
    dispositions, principally due to the recognition of a
    $9.8 million gain from the involuntary conversion of an
    asset arising from the property insurance settlement related to
    the 2004 cavern well-head fire at Moss Bluff; and
    a $0.9 million increase in operating revenues, primarily
    due to a $9.1 million increase in firm storage revenues due
    to expanded storage capacity and higher rates and a
    $2.8 million increase in interruptible storage revenues
    partially offset by a $6.2 million net reduction in
    business interruption insurance proceeds associated with lost
    revenue related to the 2004 cavern well-head fire at Moss Bluff
    and a $4.2 million decrease in net in-kind fuel recoveries
    over incurred fuel cost.  Year
    Ended December 31, 2005 compared to the Year Ended
    December 31, 2004
    
    a $12.1 million increase in operating revenues, due to the
    receipt of $8.0 million from a business interruption
    insurance claim in 2005 to reimburse Moss Bluff for revenue lost
    in 2004 due to the cavern well-head fire in 2004, described
    above and $4.2 million for net in-kind fuel recoveries over
    incurred fuel costs in 2005 compared to 2004; and
    a $1.2 million increase in operating expenses, primarily
    due to a $1.1 million increase in corporate cost
    allocations. 89




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##### Table of Contents



Future
    Trends and Outlook    Benefits from System Expansions.
    Growing Markets. 2006-2012. 2006-2015,
  Diversity of Supply Sources.
 
  Influence of LNG Imports.
 
 90




---



##### Table of Contents



Growth of Natural Gas Storage
    Facilities.
 Liquidity
    and Capital Resources        
    the retention of a portion of the proceeds from our initial
    public offering, as described below;
    cash generated from operations;
    cash distributions received from Market Hub and Gulfstream;
    borrowings under our $500 million credit facility;
    cash realized from the liquidation of United States Treasury and
    other qualifying securities that will be pledged under our
    credit facility;
    issuances of additional partnership units; and,
    debt offerings. 91




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##### Table of Contents



As of December 31, 2006Historical


Pro Forma(In thousands)Cash

$



$
8,693Short-term investments






200,000Total cash and short-term
    investments

$



$
208,693  
 
   
 
   
    Working Capital
        Spectra Energy Partners Predecessor Combined Cash
    Flow
    For the Years Ended December 31,2004


2005


2006(In thousands)Net cash provided by operating
    activities

$
83,987


$
93,272


$
62,278Net cash (used in) provided by
    investing activities


(34,269
)


92,827



(85,910
)Net cash provided by (used in)
    financing activities


(49,718
)


(186,099
)


23,632    92




---



##### Table of Contents



Operating Activities
  Investing Activities year-over-year year-over-year
  
    For 2006 compared to 2005, an increase in cash used of
    approximately $26.6 million for capital expenditures
    primarily related to the Jewell Ridge Lateral expansion project
    of East Tennessee; and
    For 2005 compared to 2004, an increase in cash used of
    approximately $25.0 million for capital expenditures
    primarily related to the Jewell Ridge Lateral and Patriot
    Extension projects.  Financing Activities  year-over-year year-over-year
  
    For 2006 compared to 2005, a decrease in cash distributed to
    Spectra Energy of $57.6 million as a result of higher
    capital expenditures and lower operating cash flow; and
    For 2005 compared to 2004, a net decrease in cash distributed to
    Spectra Energy of $15.8 million as a result of higher
    capital expenditures partially offset by higher operating cash
    flow. Off
    Balance Sheet Arrangements     Capital
    Requirements   93




---



##### Table of Contents



Description of Credit Agreement.
 
   
 
   
   
   
 94




---



##### Table of Contents




    an interest coverage ratio (the ratio of our consolidated EBITDA
    to our consolidated interest expense (net of interest income),
    in each case as defined in the credit agreement) of not less
    than 2.5 to 1.0, determined as of the last day of each quarter
    for the four-quarter period ending on the date of
    determination; and 
 
  
    a leverage ratio (the ratio of our consolidated indebtedness to
    our consolidated EBITDA, in each case as defined in the credit
    agreement) of not more than 5.0 to 1.0 (or, on a temporary basis
    for not more than three consecutive quarters following the
    consummation of certain acquisitions, not more than 5.5 to 1.0). 
 
   
 
   
  Total Contractual Cash Obligations.
  Less Than 1








More Than 5Year


2-3 Years


4-5 Years


YearsTotal


(2007)


(2008 & 2009)


(2010 & 2011)


(Beyond 2011)Long-term debt(1)

$
150,000


$



$



$



$
150,000Interest on debt obligations(2)


51,390



8,565



17,130



17,130



8,565Material/capital purchases


894



894











Right of way payments(3)


5,017



5,017Total contractual cash obligations

$
207,301


$
14,476


$
17,130


$
17,130


$
158,565     (1)
    
    Represents future principal repayments of notes payable.(2)
    
    Represents interest expense on notes payable, based on the
    stated interest rate on the notes of 5.71%.(3)
    
    Represents capital commitments for various right of way matters. 
 
 
   
  Debt Obligations.
  December 31,2005


2006(In thousands)Long-term debt(1)

$
150,000


$
150,000     (1)
    
    Represents 5.71% senior notes issued by East Tennessee and due
    in 2012. The table does not reflect borrowings we expect to make
    at the closing of this offering under our new credit facility. 
   
 95




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##### Table of Contents



Quantitative
    and Qualitative Disclosures About Market Risk         
   
   Critical
    Accounting Policies and Estimates   96




---



##### Table of Contents



Cost-Based Regulation.
  Goodwill.
      Equity Method Investments.
 97




---



##### Table of Contents



New
    Accounting Standards   98




---



##### Table of Contents



BUSINESS  Overview
      Our
    Assets
  East Tennessee System. 1,400-mile
  Gulfstream System. 690-mile
  Market Hub System.
  Our
    Operations
     99




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##### Table of Contents



WeightedRevenue Composition %


% of Physical


AverageFirm Contracts





Capacity


RemainingCapacity








Subscribed


Contract Life byOur Ownership


Reservation


Variable


Interruptible


Under


Revenue (inAsset

Interest


Fees


Fees


Contracts


Firm Contracts


years)(1)East Tennessee


100.0
%


97.7
%


1.7
%


0.6
%


89.7
%


9.3Gulfstream


24.5
%


85.6
%


2.9
%


11.5
%


68.8
%


20.2Market Hub


50.0
%


90.0
%


0.0
%


10.0
%


100.0
%


2.4     (1)
    
    The average life of each contract is calculated based on the
    average annual contract revenue for such contracts
    remaining life.   Business
    Strategies    
    Pursuing economically attractive organic expansion
    opportunities and greenfield construction
    projects.  We and our partners, including
    Spectra Energy, continually evaluate organic expansion and
    greenfield construction opportunities in existing and new
    markets that may increase the volume of natural gas and storage
    capacity reserved on our systems. For example, two
    fully-contracted expansion projects are currently being pursued
    for Gulfstream. These projects will extend the system into South
    Florida and will increase the systems total capacity from
    1.1 Bcf/d to 1.25 Bcf/d by early 2009 and have
    applications pending with FERC for approval. On the East
    Tennessee system, our recently completed Jewell Ridge Lateral
    and Patriot Extension expansions have provided East
    Tennessees customers with increased access to new sources
    of supply while extending our market reach and offering
    additional organic growth opportunities as these systems are
    further expanded. Finally, we and Spectra Energy are currently
    pursuing an expansion of the Market Hub storage facility in
    Egan, Louisiana to increase compression horsepower and increase
    its working gas storage capacity from 20 Bcf to 24 Bcf
    by 2008. An application is currently pending with FERC for
    approval to further expand Egan to 32 Bcf by 2012. Each of these
    expansions will allow the facility to accommodate additional LNG
    deliveries anticipated in the Gulf Coast region. 
  
    Increasing contracted capacity for natural gas
    transportation and storage on our systems by further expanding
    our customer base and diverse sources of natural gas
    supply.  To reduce the risk of natural gas
    supply interruptions, customers frequently seek capacity on
    pipelines and in storage facilities that have diverse sources of
    natural gas supply. Our transportation and storage systems have
    access to numerous natural gas producing regions, including the
    Gulf Coast, Mid-Continent and Appalachian regions. Additionally,
    new interstate pipeline interconnection projects are being 
 
 100




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developed to augment our customers needs, such as an
    interconnect between East Tennessee and Midwestern Pipeline. We
    are also adding new customers as a result of our connection of
    new Appalachian production on the East Tennessee system. As
    further described under  Natural Gas Industry
    Overview  Natural Gas Supply, we anticipate
    that LNG will become another significant source of supply
    accessible through our assets, allowing us to increase natural
    gas volumes contracted for transportation and storage on our
    systems. Our existing and new customers also benefit from
    numerous pipeline interconnections, which further minimize the
    risk of supply interruptions by providing additional sources of
    natural gas supply. We will continue to seek new sources of
    natural gas supply to enhance the attractiveness of our systems
    to current and future customers. 
  
    Optimizing our existing assets and achieving additional
    operating efficiencies.  We intend to enhance
    the profitability of our existing assets by undertaking
    additional initiatives to enhance utilization, improve operating
    efficiencies and develop rate and contract structures that meet
    our customers needs. We provide our customers with an
    array of service offerings designed to address their needs while
    helping us to maximize the utilization of existing capacity of
    our systems. For example, we actively seek new customers with
    non-traditional peak load requirements to increase overall
    system utilization over time. Our assets are managed to ensure
    their operations keep fuel costs low and maintenance projects
    are pursued that provide the dual benefits of improving the
    integrity of our systems while also providing additional
    saleable capacity. To further meet both our and our
    customers needs, we intend to continue to utilize a
    variety of rate and contract structures to provide year-round
    optimization in the operation and utilization of our assets. 
  
    Growing through strategic and accretive acquisitions of
    assets from third parties, Spectra Energy or
    both.  We intend to expand our existing
    natural gas transportation and storage businesses by pursuing
    acquisitions that are accretive to distributable cash flow. In
    recent years, major independent and integrated oil and gas
    companies have sold pipeline and storage assets in an effort to
    focus their operations. We expect this trend to continue and
    believe we are well positioned to take advantage of future
    acquisition opportunities. We will seek future acquisitions in
    areas where our assets currently operate that provide the
    opportunity for operational efficiencies or higher capacity
    utilization of our existing assets, as well as acquisitions in
    new geographic areas of operation. Certain factors we will
    consider in deciding whether to pursue an acquisition include,
    but are not limited to, the overall economic characteristics of
    the acquisition (such as return on capital and cash flow
    stability), the region in which the assets are located (both
    regions contiguous to our existing assets and new regions with
    attractive characteristics) and the availability and sources of
    capital to finance the acquisition. We intend to pursue
    acquisitions either independently or jointly with Spectra
    Energy. In addition to making acquisitions from third parties,
    we may also have the opportunity to acquire assets directly from
    Spectra Energy, although we cannot predict whether any such
    opportunities will be made available to us. We believe our
    affiliation with Spectra Energy positions us to pursue a broader
    array of growth opportunities than may be available to our
    competitors, although no acquisitions are currently under active
    consideration. 
 Competitive
    Strengths    
    Our ability to grow through organic expansion
    opportunities, greenfield construction projects and
    acquisitions, along with access to other business development
    opportunities, is enhanced by our affiliation with Spectra
    Energy.  As the owner of our general partner
    and a 79.6% limited partner interest in us, and the joint owner
    of our Gulfstream and Market Hub assets, Spectra Energy is
    motivated to promote and support the successful execution of our
    business plan, and to pursue projects that directly or
    indirectly enhance the value of our assets. For example, East
    Tennessee benefits from its interconnections with Spectra
    Energys Texas Eastern transportation system and Saltville
    gas storage business, and Gulfstream should benefit from
    additional natural gas supplies 101




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originating from Spectra Energys new interconnected
    Southeast Supply Header, or SESH, joint venture expected to be
    completed in 2008. Through our relationship with Spectra Energy,
    we will have access to a significant pool of management talent,
    strong commercial relationships throughout the energy industry
    and access to Spectra Energys broad operational,
    commercial, technical, risk management and administrative
    infrastructure. Spectra Energy has a long history of
    successfully pursuing and consummating natural gas
    transportation and storage operations acquisitions through a
    disciplined acquisition strategy focused on acquiring
    complementary assets and integrating the acquired assets into
    its operations. Spectra Energy has completed over
    $10 billion in acquisitions since 2000.  
    Our natural gas transportation assets are strategically
    located to transport natural gas from a number of diverse supply
    regions to high-demand end-use markets.  Our
    pipeline systems have access to a diverse range of natural gas
    supply regions, including the onshore and offshore Gulf Coast,
    Mid-Continent and Appalachian regions, both directly and through
    interconnections with numerous interstate and intrastate
    pipelines. Our pipeline systems transport natural gas directly
    to rapidly growing, high-demand markets in the Southeast,
    including Florida, Tennessee, Virginia, Georgia and North
    Carolina, and indirectly supply the Mid-Atlantic and Northeast
    markets through interconnections with other interstate
    pipelines. Our ability to reliably transport gas from diverse
    supply regions makes us attractive to customers that are
    consumers of natural gas, and our access to multiple high-demand
    end-use markets is appealing to customers that are producers of
    natural gas. Together, these attributes increase the flexibility
    and reliability of our transportation offerings and allow us to
    increase the volumes of natural gas contracted for
    transportation and storage on our systems.
    Our storage assets are strategically positioned to
    capitalize on expected increased demand for natural gas
    storage.  Over time, we expect imported LNG to
    fill a portion of the gap between traditional sources of natural
    gas supply and the growing demand for natural gas in the United
    States. Accordingly, we anticipate increased demand for natural
    gas storage as LNG imports to the Gulf Coast are significantly
    increased. LNG is typically delivered to the United States in
    large tanker shipments, with significant supplies of natural gas
    in a single shipment. Because demand for natural gas is
    relatively constant, natural gas storage will be an important
    component in balancing the LNG supply chain. Our storage assets
    are strategically located in the Gulf Coast region in proximity
    to anticipated LNG imports. As of February 16, 2007, there
    were two LNG terminals operating in the Gulf of Mexico or the
    Gulf Coast area, and 14 out of the 15 additional LNG terminals
    proposed for the Gulf Coast region had already received approval
    for construction.
    Our cash flow is relatively stable due to the high
    percentage of our assets revenues obtained from capacity
    reservation fees and the long-term nature of our
    contracts.  We provide a significant portion
    of our pipeline transportation and storage services under firm,
    fee-based contracts for terms ranging up to 23 years. Our
    systems have weighted average remaining contract lives based on
    contracted revenues of approximately 9.3 years for East
    Tennessee, 20.2 years for Gulfstream and 2.4 years for
    Market Hub. Capacity reservation fees represented approximately
    97.7%, 85.6% and 90.0% of East Tennessees,
    Gulfstreams and Market Hubs revenues, respectively,
    for the year ended December 31, 2006. This contract
    structure reduces the risk of revenue fluctuations caused by
    changes in weather or changing supply and demand conditions and
    therefore provides us with greater stability of cash flows.
    Additionally, we have little direct commodity price exposure, as
    we generally do not own the gas we transport for our customers
    and are entitled to reimbursement for natural gas used as fuel
    in most of our operations.
    Our management team has significant experience in the
    management of natural gas transportation and storage and energy
    industries.  Our general partners
    management team has extensive experience in building, acquiring,
    integrating and managing energy assets in a reliable and
    cost-effective manner and includes some of the most senior
    officers of Spectra Energy. On average, the members of our
    general partners management team have over 20 years
    of experience in the energy industry, with significant
    commercial, operational, acquisition and business development
    expertise. 102




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
    Our high quality assets have been well
    maintained.  Our natural gas pipelines and
    storage facilities consist of high quality assets that have been
    well maintained, resulting in low cost, efficient operations.
    Our recently constructed Gulfstream and Market Hub systems
    utilize the latest available natural gas transportation and
    storage equipment and technology. We have been recognized by the
    industry for our use of superior maintenance practices aimed at
    improving the reliability of our assets and sustaining their
    useful life. Additionally, Spectra Energy, through its role in
    the Interstate Natural Gas Association of America, has actively
    shaped new industry maintenance regulations such as the
    U.S. Department of Transportations Gas Transmission
    Pipeline Integrity Management program, and has been an industry
    leader in implementing pipeline integrity standards. 
   
 Our
    Relationship with Spectra Energy     Natural
    Gas Industry Overview   
 103




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Natural
    Gas Demand
    U.S. Natural Gas Consumption
  
   Source: Energy
    Information Administration, February 2007.
    2006-2015,
 104




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2006-2012,
 
  Natural
    Gas Supply
    U.S. Natural Gas Production
  
   Source: Energy
    Information Administration, February 2007.
   
   
 105




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U.S. Liquefied Natural Gas import Volume
  
   Source: Energy
    Information Administration, February 2007.
 
   
     106




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Our Asset
    Portfolio  East
    Tennessee Natural Gas System
  General.
        32-mile,
   107




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East Tennessee Customers.
    East Tennessee Contracts.
 108




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.
        East Tennessee Competition.
       109




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East Tennessee Natural Gas Supply.
  Gulfstream
    Natural Gas System
  General. 690-mile
     
  18-mile, 23-year
 
   110




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Gulfstream Customers.
    Gulfstream Contracts.
 111




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Gulfstream Competition.
  5,000-mile
 
   
  Gulfstream Natural Gas
    Supply.
    Market
    Hub System
  General.
 112




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38-mile
  20-mile
    
   Market Hub Customers.
 113




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Market Hub Contracts.
      Market Hub Competition.
  Market Hub Natural Gas Supply.
 114




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Safety
    and Maintenance        right-to-know
 115




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Regulation  FERC
    Regulation
    
    transportation and storage of natural gas;
    rates and charges;
    terms of service including creditworthiness requirements;
    construction of new facilities;
    extension or abandonment of service and facilities;
    accounts and records;
    depreciation and amortization policies;
    our relationships with our marketing affiliates; and
    the initiation and discontinuation of services.           116




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FERC
    Policy Statement on Income Tax Allowances
   117




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cost-of-service case-by-case case-by-case
    Energy
    Policy Act of 2005
   118




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Additional
    Regulation of Moss Bluff
       Seasonality   Environmental
    Regulation  General.
 119




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and/or
      Waste Management.
  Site Remediation.
   120




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Air Emissions.
    Water Discharges. and/or
    Activities on Federal Lands.
  Endangered Species.
 121




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Other Laws and Regulations. and/or Massachusetts,
    et al v. EPA
 Title to
    Properties and
    Rights-of-Way  rights-of-way, right-of-way, right-of-way, rights-of-way,
 Insurance   Facilities   122




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Employees   Legal
    Proceedings   123




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MANAGEMENT Management
    of Spectra Energy Partners, LP            day-to-day
 124




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Directors
    and Executive Officers    
 Name

Age


Position with Spectra Energy Partners GP, LLCMartha B. Wyrsch


49


Chairman of the BoardC. Gregory Harper


43


President, Chief Executive Officer
    and DirectorLon C. Mitchell, Jr.


54


Vice President and Chief Financial
    Officer  
    Martha B. Wyrsch
  C. Gregory Harper
  Lon C. Mitchell, Jr.
 Reimbursement
    of Expenses of Our General Partner   125




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Executive
    Compensation   Compensation
    Discussion and Analysis   
   
     126




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
    annual base salary;
    annual performance based cash bonuses;
    performance awards under Spectra Energys and our long-term
    incentive plan;
    Spectra Energys contributions under its 401(k) and profit
    sharing plan; and
    Spectra Energys other benefit plans on the same basis as
    all other Spectra Energy employees.           Compensation
    of Directors  out-of-pocket
 127




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Long-Term
    Incentive Plan  General.
 
  Restricted Units and Phantom Units.
        Unit Options.
   128




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Substitution Awards.
  Termination of Long-Term Incentive
    Plan.
 129




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SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT    
    each person who then will beneficially own 5% or more of the
    then outstanding units;
    all of the directors of Spectra Energy Partners GP, LLC;
    each named executive officer of Spectra Energy Partners GP,
    LLC; and
    all directors and officers of Spectra Energy Partners GP, LLC as
    a group.  
 Percentage ofTotal CommonPercentage of


andCommon Units


Percentage of


Subordinated


Subordinated


Subordinatedto be


Common Units to


Units to be


Units to be


Units to beBeneficially


be Beneficially


Beneficially


Beneficially


BeneficiallyName of Beneficial Owner (1)

Owned


Owned


Owned


Owned


OwnedSpectra Energy Corp(2)


29,812,011



72.2
%


20,030,066



100
%


81.3
%Spectra Energy Transmission







%







%Spectra Energy Southeast Pipeline
    Corp.







%







%Spectra Energy Partners (DE) GP, LP







%







%Martha B. Wyrsch(3)







%







%



%C. Gregory Harper(3)







%







%



%Lon C. Mitchell, Jr.(3)







%







%



%%







%



%%







%



%%







%



%%







%



%All directors and executive
    officers as a group (four persons)















%



%  
    (*)
    
    Less than 1% of units outstanding(1)
    
    Unless otherwise indicated, the address for all beneficial
    owners in this table is 5400 Westheimer Court, Houston, TX
    77056. 
  (2)
    
    Spectra Energy Corp is the ultimate parent company of each of
    Spectra Energy Transmission, Spectra Energy Southeast Pipeline
    Corp. and Spectra Energy Partners (DE) GP, LP and may,
    therefore, be deemed to beneficially own the units held by each
    of Spectra Energy Transmission, Spectra Energy Southeast
    Pipeline Corp. and Spectra Energy Partners (DE) GP, LP. 
 
  (3)
    
    Does not include common units that may be purchased in the
    directed unit program. 
 130




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CERTAIN
    RELATIONSHIPS AND RELATED PARTY TRANSACTIONS   Distributions
    and Payments to Our General Partner and its Affiliates    Formation
    Stage
  The consideration received by Spectra Energy and its
    subsidiaries for the contribution of the assets and liabilities
    to us
    
     29,812,011 common units; 20,030,066 subordinated units; 1,251,879 general partner units; the incentive distribution rights; 
   $325 million cash payment from the proceeds of
    borrowings under our credit facility. 
  Operational
    Stage
  Distributions of available cash to our general partner and its
    affiliates
    
    We will generally make cash distributions 98% to our unitholders
    pro rata, including our general partner and its affiliates, as
    the holders of an aggregate 29,812,011 common units 20,030,066
    subordinated units, and 2% to our general partner. In addition,
    if distributions exceed the minimum quarterly distribution and
    other higher target distribution levels, our general partner
    will be entitled to increasing percentages of the distributions,
    up to 50% of the distributions above the highest target
    distribution level.Assuming we have sufficient available cash to pay the full
    minimum quarterly distribution on all of our outstanding units
    for four quarters, our general partner and its affiliates would
    receive an annual distribution of approximately
    $1.6 million on their general partner units and
    $64.8 million on their common and subordinated units.Payments to our general partner and its affiliates
    
    We will reimburse Spectra Energy and its affiliates for the
    payment of certain operating expenses and for the provision of
    various general and administrative services for our benefit. For
    further information regarding the administrative fee, please
    read Certain Relationship and Related Party
    Transactions  Omnibus Agreement 
    Reimbursement of Operating and General and Administrative
    Expense. 131




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Withdrawal or removal of our general partner
    
    If our general partner withdraws or is removed, its general
    partner interest and its incentive distribution rights will
    either be sold to the new general partner for cash or converted
    into common units, in each case for an amount equal to the fair
    market value of those interests. Please read The
    Partnership Agreement  Withdrawal or Removal of the
    General Partner.  Liquidation
    Stage
  Liquidation
    
    Upon our liquidation, the partners, including our general
    partner, will be entitled to receive liquidating distributions
    according to their respective capital account balances.  Agreements
    Governing the Transactions    Omnibus
    Agreement    
    our obligation to reimburse Spectra Energy the payment of
    operating expenses, including salary and benefits of operating
    personnel, it incurs on our behalf in connection with our
    business and operations;
    our obligation to reimburse Spectra Energy for providing us
    general and administrative services with respect to our business
    and operations, which reimbursement is capped at
    $     million, subject to increases in
    connection with expansions of our operations through the
    acquisition or construction of new assets or businesses with the
    concurrence of our conflicts committee;
    our obligation to reimburse Spectra Energy for insurance
    coverage expenses it incurs with respect to our business and
    operations and with respect to director and officer liability
    coverage;
    Spectra Energys obligation to indemnify us for certain
    liabilities and our obligation to indemnify Spectra Energy for
    certain liabilities; and
    Spectra Energys obligation to continue to maintain its
    credit support, including without limitation guarantees and
    letters of credit, for our obligations related to commercial
    contracts with respect to our business or operations that are in
    effect at the closing of this offering until the expiration of
    such contracts.     132




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Reimbursement
    of Operating and General and Administrative
    Expense
      Competition
    Indemnification
     Contracts
    with Affiliates  Gulfstream
    Limited Liability Company Agreement
     133




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Market
    Hub Limited Liability Company Agreement
      Storage
    and Transportation Related Arrangements
    East Tennessee.
  Market Hub.
 134




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##### Table of Contents



CONFLICTS
    OF INTEREST AND FIDUCIARY DUTIES Conflicts
    of Interest        
    approved by the conflicts committee, although our general
    partner is not obligated to seek such approval;
    approved by the vote of a majority of the outstanding common
    units, excluding any common units owned by our general partner
    or any of its affiliates;
    on terms no less favorable to us than those generally being
    provided to or available from unrelated third parties; or
    fair and reasonable to us, taking into account the totality of
    the relationships among the parties involved, including other
    transactions that may be particularly favorable or advantageous
    to us.      Spectra
    Energy and its affiliates, including DCP Midstream, LLC and DCP
    Midstream Partners, LP, are not limited in their ability to
    compete with us, which could cause conflicts of interest and
    limit our ability to acquire additional assets or businesses
    which in turn could adversely affect our results of operations
    and cash available for distribution to our
    unitholders.
   135




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Neither
    our partnership agreement nor any other agreement requires
    Spectra Energy to pursue a business strategy that favors us or
    utilizes our assets or dictates what markets to pursue or grow.
    Spectra Energys directors have a fiduciary duty to make
    these decisions in the best interests of the owners of Spectra
    Energy, which may be contrary to our interests.
  and/or
  Our
    general partner is allowed to take into account the interests of
    parties other than us, such as Spectra Energy, in resolving
    conflicts of interest.
    We
    will not have any employees and will rely on the employees of
    our general partner and its affiliates.
    Our
    partnership agreement limits our general partners
    fiduciary duties to holders of our common units and subordinated
    units and restricts the remedies available to holders of our
    common units and subordinated units for actions taken by our
    general partner that might otherwise constitute breaches of
    fiduciary duty.
    
    permits our general partner to make a number of decisions in its
    individual capacity, as opposed to in its capacity as our
    general partner. This entitles our general partner to consider
    only the interests and factors that it desires, and it has no
    duty or obligation to give any consideration to any interest of,
    or factors affecting, us, our affiliates or any limited partner.
    Examples include the exercise of its limited call right, the
    exercise of its rights to transfer or vote the units it owns,
    the exercise of its registration rights and its determination
    whether or not to consent to any merger or consolidation of the
    partnership or amendment to the partnership agreement; 136




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
    provides that our general partner will not have any liability to
    us or our unitholders for decisions made in its capacity as a
    general partner so long as it acted in good faith, meaning it
    believed the decision was in the best interests of our
    partnership;
    generally provides that affiliated transactions and resolutions
    of conflicts of interest not approved by the conflicts committee
    of the board of directors of our general partner acting in good
    faith and not involving a vote of unitholders must be on terms
    no less favorable to us than those generally being provided to
    or available from unrelated third parties or must be fair
    and reasonable to us, as determined by our general partner
    in good faith and that, in determining whether a transaction or
    resolution is fair and reasonable, our general
    partner may consider the totality of the relationships between
    the parties involved, including other transactions that may be
    particularly advantageous or beneficial to us;
    provides that our general partner and its officers and directors
    will not be liable for monetary damages to us, our limited
    partners or assignees for any acts or omissions unless there has
    been a final and non-appealable judgment entered by a court of
    competent jurisdiction determining that the general partner or
    those other persons acted in bad faith or engaged in fraud or
    willful misconduct or, in the case of a criminal matter, acted
    with knowledge that the conduct was criminal; and
    provides that in resolving conflicts of interest, it will be
    presumed that in making its decision the general partner acted
    in good faith, and in any proceeding brought by or on behalf of
    any limited partner or us, the person bringing or prosecuting
    such proceeding will have the burden of overcoming such
    presumption.    Except
    in limited circumstances, our general partner has the power and
    authority to conduct our business without unitholder
    approval.
    
    the making of any expenditures, the lending or borrowing of
    money, the assumption or guarantee of or other contracting for,
    indebtedness and other liabilities, the issuance of evidences of
    indebtedness, including indebtedness that is convertible into
    our securities, and the incurring of any other obligations;
    the purchase, sale or other acquisition or disposition of our
    securities, or the issuance of additional options, rights,
    warrants and appreciation rights relating to our securities;
    the mortgage, pledge, encumbrance, hypothecation or exchange of
    any or all of our assets;
    the negotiation, execution and performance of any contracts,
    conveyances or other instruments;
    the distribution of our cash;
    the selection and dismissal of employees and agents, outside
    attorneys, accountants, consultants and contractors and the
    determination of their compensation and other terms of
    employment or hiring;
    the maintenance of insurance for our benefit and the benefit of
    our partners;
    the formation of, or acquisition of an interest in, the
    contribution of property to, and the making of loans to, any
    limited or general partnerships, joint ventures, corporations,
    limited liability companies or other relationships; 137




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
    the control of any matters affecting our rights and obligations,
    including the bringing and defending of actions at law or in
    equity and otherwise engaging in the conduct of litigation,
    arbitration or mediation and the incurring of legal expense and
    the settlement of claims and litigation;
    the indemnification of any person against liabilities and
    contingencies to the extent permitted by law;
    the making of tax, regulatory and other filings, or rendering of
    periodic or other reports to governmental or other agencies
    having jurisdiction over our business or assets; and
    the entering into of agreements with any of its affiliates to
    render services to us or to itself in the discharge of its
    duties as our general partner.    Our
    general partner determines the amount and timing of asset
    purchases and sales, capital expenditures, borrowings, issuance
    of additional partnership securities and the creation, reduction
    or increase of reserves, each of which can affect the amount of
    cash that is distributed to our unitholders.
      
    cash expenditures;
    borrowings;
    the issuance of additional units; and
    the creation, reduction or increase of reserves in any quarter.      
    enabling our general partner or its affiliates to receive
    distributions on any subordinated units held by them or the
    incentive distribution rights; or
    hastening the expiration of the subordination period.     138




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Our
    general partner determines which costs incurred by Spectra
    Energy are reimbursable by us.
    Our
    partnership agreement does not restrict our general partner from
    causing us to pay it or its affiliates for any services rendered
    to us or entering into additional contractual arrangements with
    any of these entities on our behalf.
        Our
    general partner intends to limit its liability regarding our
    obligations.
    Our
    general partner may exercise its right to call and purchase
    common units if it and its affiliates own more than 80% of the
    common units.
    Common
    unitholders will have no right to enforce obligations of our
    general partner and its affiliates under agreements with
    us.
   139




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Our
    general partner decides whether to retain separate counsel,
    accountants or others to perform services for us.
    Our
    general partner may elect to cause us to issue Class B
    units to it in connection with a resetting of the target
    distribution levels related to our general partners
    incentive distribution rights without the approval of the
    conflicts committee of our general partner or our unitholders.
    This may result in lower distributions to our common unitholders
    in certain situations.
   Fiduciary
    Duties     140




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State-law fiduciary duty standards
    
    Fiduciary duties are generally considered to include an
    obligation to act in good faith and with due care and loyalty.
    The duty of care, in the absence of a provision in a partnership
    agreement providing otherwise, would generally require a general
    partner to act for the partnership in the same manner as a
    prudent person would act on his own behalf. The duty of loyalty,
    in the absence of a provision in a partnership agreement
    providing otherwise, would generally prohibit a general partner
    of a Delaware limited partnership from taking any action or
    engaging in any transaction where a conflict of interest is
    present.The Delaware Act generally provides that a limited partner may
    institute legal action on behalf of the partnership to recover
    damages from a third party where a general partner has refused
    to institute the action or where an effort to cause a general
    partner to do so is not likely to succeed. In addition, the
    statutory or case law of some jurisdictions may permit a limited
    partner to institute legal action on behalf of himself and all
    other similarly situated limited partners to recover damages
    from a general partner for violations of its fiduciary duties to
    the limited partners.Partnership agreement modified standards
    
    Our partnership agreement contains provisions that waive or
    consent to conduct by our general partner and its affiliates
    that might otherwise raise issues about compliance with
    fiduciary duties or applicable law. For example, our partnership
    agreement provides that when our general partner is acting in
    its capacity as our general partner, as opposed to in its
    individual capacity, it must act in good faith and
    will not be subject to any other standard under applicable law.
    In addition, when our general partner is acting in its
    individual capacity, as opposed to in its capacity as our
    general partner, it may act without any fiduciary obligation to
    us or the unitholders whatsoever. These standards reduce the
    obligations to which our general partner would otherwise be held.In addition to the other more specific provisions limiting the
    obligations of our general partner, our partnership agreement
    further provides that our general partner and its officers and
    directors will not be liable for monetary damages to us, our
    limited partners or assignees for errors of judgment or for any
    acts or omissions unless there has been a final and
    non-appealable judgment by a court of competent jurisdiction
    determining that the general partner or its officers and
    directors acted in bad faith or engaged in 141




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fraud or willful misconduct or in the case of a criminal matter,
    acted with knowledge that the indemnitees conduct was
    criminal.Special provisions regarding affiliated
    transactions.  Our partnership agreement generally
    provides that affiliated transactions and resolutions of
    conflicts of interest not involving a vote of unitholders and
    that are not approved by the conflicts committee of the board of
    directors of our general partner must be: on terms no less favorable to us than those
    generally being provided to or available from unrelated third
    parties; or fair and reasonable to us, taking into
    account the totality of the relationships between the parties
    involved (including other transactions that may be particularly
    favorable or advantageous to us).If our general partner does not seek approval from the conflicts
    committee and its board of directors determines that the
    resolution or course of action taken with respect to the
    conflict of interest satisfies either of the standards set forth
    in the bullet points above, then it will be presumed that, in
    making its decision, the board of directors, which may include
    board members affected by the conflict of interest, acted in
    good faith and in any proceeding brought by or on behalf of any
    limited partner or the partnership, the person bringing or
    prosecuting such proceeding will have the burden of overcoming
    such presumption. These standards reduce the obligations to
    which our general partner would otherwise be held.     142




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DESCRIPTION
    OF THE COMMON UNITS The
    Units   Transfer
    Agent and Registrar  Duties.
  
    surety bond premiums to replace lost or stolen certificates,
    taxes and other governmental charges;
    special charges for services requested by a common
    unitholder; and
    other similar fees or charges.    Resignation or Removal.
 Transfer
    of Common Units    
    becomes the record holder of the common units and is an assignee
    until admitted into our partnership as a substituted limited
    partner;
    automatically requests admission as a substituted limited
    partner in our partnership;
    executes and agrees to be bound by the terms and conditions of
    our partnership agreement;
    represents that the transferee has the capacity, power and
    authority to enter into our partnership agreement;
    grants powers of attorney to the officers of our general partner
    and any liquidator of us as specified in our partnership
    agreement;
    gives the consents, covenants, representations and approvals
    contained in our partnership agreement, such as the approval of
    all transactions and agreements we are entering into in
    connection with our formation and this offering; and 143




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
    certifies:  -
    that the transferee is an individual or is an entity subject to
    United States federal income taxation on the income generated by
    us; or-
    that, if the transferee is an entity not subject to United
    States federal income taxation on the income generated by us, as
    in the case, for example, of a mutual fund taxed as a regulated
    investment company or a partnership, all the entitys
    owners are subject to United States federal income taxation on
    the income generated by us.        
    the right to assign the common unit to a purchaser or other
    transferee; and
    the right to transfer the right to seek admission as a
    substituted limited partner in our partnership for the
    transferred common units.    
    will not receive cash distributions;
    will not be allocated any of our income, gain, deduction, losses
    or credits for federal income tax or other tax purposes;
    may not receive some federal income tax information or reports
    furnished to record holders of common units; and
    will have no voting rights;       144




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THE
    PARTNERSHIP AGREEMENT      
    with regard to distributions of available cash, please read
    Provisions of Our Partnership Agreement Relating to Cash
    Distributions;
    with regard to the fiduciary duties of our general partner,
    please read Conflicts of Interest and Fiduciary
    Duties;
    with regard to the transfer of common units, please read
    Description of the Common Units  Transfer of
    Common Units; and
    with regard to allocations of taxable income and taxable loss,
    please read Material Tax Consequences. Organization
    and Duration   Purpose     Power of
    Attorney   Cash
    Distributions   Capital
    Contributions   145




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Voting
    Rights    
    during the subordination period, the approval of a majority of
    the common units, excluding those common units held by our
    general partner and its affiliates, and a majority of the
    subordinated units, voting as separate classes; and
    after the subordination period, the approval of a majority of
    the common units and Class B units, if any, voting as a
    single class.    Issuance of additional units

No approval right.Amendment of the partnership
    agreement

Certain amendments may be made by
    the general partner without the approval of the unitholders.
    Other amendments generally require the approval of a unit
    majority. Please read  Amendment of the
    Partnership Agreement.Merger of our partnership or the
    sale of all or substantially all of our assets

Unit majority in certain
    circumstances. Please read  Merger,
    Consolidation, Conversion, Sale or Other Disposition of
    Assets.Dissolution of our partnership

Unit majority. Please read
     Termination and Dissolution.Continuation of our business upon
    dissolution

Unit majority. Please read
     Termination and Dissolution.Withdrawal of the general partner

Under most circumstances, the
    approval of a majority of the common units, excluding common
    units held by our general partner and its affiliates, is
    required for the withdrawal of our general partner prior to
    June 30, 2017 in a manner that would cause a dissolution of
    our partnership. Please read  Withdrawal or
    Removal of the General Partner.Removal of the general partner

Not less than
    662/3%
    of the outstanding units, voting as a single class, including
    units held by our general partner and its affiliates. Please
    read  Withdrawal or Removal of the General
    Partner.Transfer of the general partner
    interest

Our general partner may transfer
    all, but not less than all, of its general partner interest in
    us without a vote of our unitholders to an affiliate or another
    person in connection with its merger or consolidation with or
    into, or sale of all or substantially all of its assets to, such
    person. The approval of a majority of the common units,
    excluding common units held by the general partner and its
    affiliates, is required in other circumstances for a transfer of
    the general partner interest to a third party prior to
    June 30, 2017. See  Transfer of General
    Partner Units. 146




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Transfer of incentive distribution
    rights

Our general partner may transfer
    any or all of the incentive distribution rights without a vote
    of our unitholders to an affiliate or another person as part of
    our general partners merger or consolidation with or into,
    or sale of all or substantially all of its assets or the sale of
    all of the ownership interests in such holder to, such person.
    The approval of a majority of the common units, excluding common
    units held by the general partner and its affiliates, is
    required in other circumstances for a transfer of the incentive
    distribution rights to a third party prior to June 30,
    2017. Please read  Transfer of Incentive
    Distribution Rights.Transfer of ownership interests in
    our general partner

No approval required at any time.
    Please read  Transfer of
    Ownership Interests in the General Partner.  Limited
    Liability    
    to remove or replace the general partner;
    to approve some amendments to the partnership agreement; or
    to take other action under the partnership agreement;       147




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Issuance
    of Additional Securities         Amendment
    of the Partnership Agreement  General.
 148




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Prohibited Amendments.
  
    enlarge the obligations of any limited partner without its
    consent, unless approved by at least a majority of the type or
    class of limited partner interests so affected; or
    enlarge the obligations of, restrict in any way any action by or
    rights of, or reduce in any way the amounts distributable,
    reimbursable or otherwise payable by us to our general partner
    or any of its affiliates without the consent of our general
    partner, which consent may be given or withheld at its option.    No Unitholder Approval.
  
    a change in our name, the location of our principal place of our
    business, our registered agent or our registered office;
    the admission, substitution, withdrawal or removal of partners
    in accordance with our partnership agreement;
    a change that our general partner determines to be necessary or
    appropriate to qualify or continue our qualification as a
    limited partnership or a partnership in which the limited
    partners have limited liability under the laws of any state or
    to ensure that neither we nor the operating partnership nor any
    of its subsidiaries will be treated as an association taxable as
    a corporation or otherwise taxed as an entity for federal income
    tax purposes;
    an amendment that is necessary, in the opinion of our counsel,
    to prevent us or our general partner or its directors, officers,
    agents or trustees from in any manner being subjected to the
    provisions of the Investment Company Act of 1940, the Investment
    Advisors Act of 1940, or plan asset regulations
    adopted under the Employee Retirement Income Security Act of
    1974, or ERISA, whether or not substantially similar to plan
    asset regulations currently applied or proposed;
    an amendment that our general partner determines to be necessary
    or appropriate for the authorization of additional partnership
    securities or rights to acquire partnership securities,
    including any amendment that our general partner determines is
    necessary or appropriate in connection with:  
    the adjustments of the minimum quarterly distribution, first
    target distribution, second target distribution and third target
    distribution in connection with the reset of our general
    partners incentive distribution rights as described under
    Provisions of Our Partnership Agreement Relating to Cash
    Distributions  General Partners Right to Reset
    Incentive Distribution Levels; or
    the implementation of the provisions relating to our general
    partners right to reset its incentive distribution rights
    in exchange for Class B units; and
    any modification of the incentive distribution rights made in
    connection with the issuance of additional partnership
    securities or rights to acquire partnership securities, provided
    that, any such modifications and related issuance of partnership
    securities have received approval by a majority of the members
    of the conflicts committee of our general partner;  
    any amendment expressly permitted in our partnership agreement
    to be made by our general partner acting alone; 149




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
    an amendment effected, necessitated or contemplated by a merger
    agreement that has been approved under the terms of our
    partnership agreement;
    any amendment that our general partner determines to be
    necessary or appropriate for the formation by us of, or our
    investment in, any corporation, partnership or other entity, as
    otherwise permitted by our partnership agreement;
    a change in our fiscal year or taxable year and related changes;
    conversions into, mergers with or conveyances to another limited
    liability entity that is newly formed and has no assets,
    liabilities or operations at the time of the conversion, merger
    or conveyance other than those it receives by way of the
    conversion, merger or conveyance; or
    any other amendments substantially similar to any of the matters
    described in the clauses above.    
    do not adversely affect in any material respect the limited
    partners considered as a whole or any particular class of
    limited partners;
    are necessary or appropriate to satisfy any requirements,
    conditions or guidelines contained in any opinion, directive,
    order, ruling or regulation of any federal or state agency or
    judicial authority or contained in any federal or state statute;
    are necessary or appropriate to facilitate the trading of
    limited partner interests or to comply with any rule,
    regulation, guideline or requirement of any securities exchange
    on which the limited partner interests are or will be listed for
    trading;
    are necessary or appropriate for any action taken by our general
    partner relating to splits or combinations of units under the
    provisions of our partnership agreement; or
    are required to effect the intent expressed in this prospectus
    or the intent of the provisions of our partnership agreement or
    are otherwise contemplated by our partnership agreement.  Opinion of Counsel and Unitholder
    Approval.
   Merger,
    Consolidation, Conversion, Sale or Other Disposition of
    Assets     150




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Termination
    and Dissolution    
    the election of our general partner to dissolve us, if approved
    by the holders of units representing a unit majority;
    there being no limited partners, unless we are continued without
    dissolution in accordance with applicable Delaware law;
    the entry of a decree of judicial dissolution of our
    partnership; or
    the withdrawal or removal of our general partner or any other
    event that results in its ceasing to be our general partner
    other than by reason of a transfer of its general partner
    interest in accordance with our partnership agreement or
    withdrawal or removal following approval and admission of a
    successor.    
    the action would not result in the loss of limited liability of
    any limited partner; and
    neither our partnership, our operating partnership nor any of
    our other subsidiaries would be treated as an association
    taxable as a corporation or otherwise be taxable as an entity
    for federal income tax purposes upon the exercise of that right
    to continue. Liquidation
    and Distribution of Proceeds   151




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Withdrawal
    or Removal of the General Partner      2 3 1 3
    
    the subordination period will end, and all outstanding
    subordinated units will immediately convert into common units on
    a
    one-for-one
    basis;
    any existing arrearages in payment of the minimum quarterly
    distribution on the common units will be extinguished; and
    our general partner will have the right to convert its general
    partner interest and its incentive distribution rights into
    common units or to receive cash in exchange for those interests
    based on the fair market value of those interests at that time.   152




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Transfer
    of General Partner Units    
    an affiliate of our general partner (other than an
    individual); or
    another entity as part of the merger or consolidation of our
    general partner with or into another entity or the transfer by
    our general partner of all or substantially all of its assets to
    another entity,     Transfer
    of Ownership Interests in the General Partner   Transfer
    of Incentive Distribution Rights   Change of
    Management Provisions   153




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
    the subordination period will end and all outstanding
    subordinated units will immediately convert into common units on
    a
    one-for-one
    basis;
    any existing arrearages in payment of the minimum quarterly
    distribution on the common units will be extinguished; and
    our general partner will have the right to convert its general
    partner units and its incentive distribution rights into common
    units or to receive cash in exchange for those interests based
    on the fair market value of those interests at that time. Limited
    Call Right    
    the highest cash price paid by either of our general partner or
    any of its affiliates for any limited partner interests of the
    class purchased within the 90 days preceding the date on
    which our general partner first mails notice of its election to
    purchase those limited partner interests; and
    the current market price as of the date three days before the
    date the notice is mailed.   Non-Taxpaying
    Assignees; Redemption    
    that the transferee or unitholder is an individual or an entity
    subject to United States federal income taxation on the income
    generated by us; or
    that, if the transferee unitholder is an entity not subject to
    United States federal income taxation on the income generated by
    us, as in the case, for example, of a mutual fund taxed as a
    regulated investment company or a partnership, all the
    entitys owners are subject to United States federal income
    taxation on the income generated by us.   154




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
    a transfer application containing the required certification;
    a re-certification containing the required certification within
    30 days after request; or
    provides a false certification; then           Meetings;
    Voting         155




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Status as
    Limited Partner   Non-Citizen
    Assignees; Redemption   Indemnification    
    our general partner;
    any departing general partner;
    any person who is or was an affiliate of a general partner or
    any departing general partner;
    any person who is or was a director, officer, member, partner,
    fiduciary or trustee of any entity set forth in the preceding
    three bullet points;
    any person who is or was serving as director, officer, member,
    partner, fiduciary or trustee of another person at the request
    of our general partner or any departing general partner; and
    any person designated by our general partner.   Reimbursement
    of Expenses   156




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Books and
    Reports       Right to
    Inspect Our Books and Records    
    a current list of the name and last known address of each
    partner;
    a copy of our tax returns;
    information as to the amount of cash, and a description and
    statement of the agreed value of any other property or services,
    contributed or to be contributed by each partner and the date on
    which each partner became a partner;
    copies of our partnership agreement, our certificate of limited
    partnership, related amendments and powers of attorney under
    which they have been executed;
    information regarding the status of our business and financial
    condition; and
    any other information regarding our affairs as is just and
    reasonable.   Registration
    Rights   157




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UNITS
    ELIGIBLE FOR FUTURE SALE      
    1% of the total number of the securities outstanding; or
    the average weekly reported trading volume of the common units
    for the four calendar weeks prior to the sale.        lock-up
 158




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MATERIAL
    TAX CONSEQUENCES           Partnership
    Status   159




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Limited
    Partner Status   160




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Tax
    Consequences of Unit Ownership  Flow-Through of Taxable Income.
  Treatment of
    Distributions.
  and/or
  Ratio of Taxable Income to
    Distributions.
 161




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
    gross income from operations exceeds the amount required to make
    the minimum quarterly distribution on all units, yet we only
    distribute the minimum quarterly distribution on all
    units; or
    we make a future offering of common units and use the proceeds
    of the offering in a manner that does not produce substantial
    additional deductions during the period described above, such as
    to repay indebtedness outstanding at the time of this offering
    or to acquire property that is not eligible for depreciation or
    amortization for federal income tax purposes or that is
    depreciable or amortizable at a rate significantly slower than
    the rate applicable to our assets at the time of this offering.  Basis of Common Units.
  Limitations on Deductibility of
    Losses.
     162




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Limitations on Interest Deductions.
  
    interest on indebtedness properly allocable to property held for
    investment;
    our interest expense attributed to portfolio income; and
    the portion of interest expense incurred to purchase or carry an
    interest in a passive activity to the extent attributable to
    portfolio income.    Entity-Level Collections.
  Allocation of Income, Gain, Loss and
    Deduction.
   163




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
    his relative contributions to us;
    the interests of all the partners in profits and losses;
    the interest of all the partners in cash flow; and
    the rights of all the partners to distributions of capital upon
    liquidation.    Treatment of Short Sales.
  
    any of our income, gain, loss or deduction with respect to those
    units would not be reportable by the unitholder;
    any cash distributions received by the unitholder as to those
    units would be fully taxable; and
    all of these distributions would appear to be ordinary income.    Alternative Minimum Tax.
 164




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Tax Rates.
  Section 754 Election.
  Regulation Section 1.197-2(g)(3) Regulation Section 1.167(c)-1(a)(6),
  non-amortizable Regulation Section 1.167(c)-1(a)(6), Regulation Section 1.197-2(g)(3).
 165




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Tax
    Treatment of Operations  Accounting Method and Taxable Year.
  Initial Tax Basis, Depreciation and
    Amortization.
   166




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Valuation and Tax Basis of Our
    Properties.
 Disposition
    of Common Units  Recognition of Gain or Loss.
       167




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
    a short sale;
    an offsetting notional principal contract; or
    a futures or forward contract with respect to the partnership
    interest or substantially identical property.    Allocations Between Transferors and
    Transferees.
      Notification Requirements.
 168




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Constructive Termination.
 Uniformity
    of Units  Regulation Section 1.167(c)-1(a)(6) Regulation Section 1.197-2(g)(3).
  Regulation Section 1.167(c)-1(a)(6), Section 1.197-2(g)(3).
 169




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Tax-Exempt
    Organizations and Other Investors      Form W-8BEN
     Administrative
    Matters  Information Returns and Audit
    Procedures. Schedule K-1,
   170




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Nominee Reporting.
                  Accuracy-Related Penalties.
   171




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Reportable Transactions.
    
    accuracy-related penalties with a broader scope, significantly
    narrower exceptions, and potentially greater amounts than
    described above at  Accuracy Related
    Penalties,
    for those persons otherwise entitled to deduct interest on
    federal tax deficiencies, nondeductibility of interest on any
    resulting tax liability and
    in the case of a listed transaction, an extended statute of
    limitations.   State,
    Local, Foreign and Other Tax Considerations   172




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It is the responsibility of each unitholder to investigate
    the legal and tax consequences, under the laws of pertinent
    jurisdictions, of his investment in us. Accordingly, each
    prospective unitholder is urged to consult, and depend upon, his
    tax counsel or other advisor with regard to those matters.
    Further, it is the responsibility of each unitholder to file all
    state, local and foreign, as well as United States federal tax
    returns, that may be required of him. Vinson & Elkins
    L.L.P. has not rendered an opinion on the state, local or
    foreign tax consequences of an investment in us.
 173




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SELLING
    UNITHOLDER   
 
   
  
    the underwriters option to purchase additional units is
    not exercised; and
    the underwriters exercise their option to purchase additional
    units in full.  
 Units Owned ImmediatelyUnits Owned


After Exercise ofImmediately After


Underwriters Option andThis Offering


Related Unit RedemptionAssuming





AssumingUnderwriters





UnderwritersOption is Not





Option is ExercisedName of Selling Unitholder

Exercised


Percent(1)


in Full


Percent(1)Spectra Energy Partners (DE) GP, LP


1,725,000




%


0




%  
    (1)
    
    Percentage of total units outstanding, including common units,
    subordinated units and general partner units. 174




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INVESTMENT
    IN SPECTRA ENERGY PARTNERS, LP BY EMPLOYEE BENEFIT
    PLANS    
    whether the investment is prudent under
    Section 404(a)(1)(B) of ERISA;
    whether in making the investment, that plan will satisfy the
    diversification requirements of Section 404(a)(1)(C) of
    ERISA; and
    whether the investment will result in recognition of unrelated
    business taxable income by the plan and, if so, the potential
    after-tax investment return. Please read Material Tax
    Consequences  Tax-Exempt Organizations and Other
    Investors.                   175




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UNDERWRITING    
 Number ofCommon UnitsCitigroup Global Markets Inc.Lehman Brothers Inc.Merrill Lynch, Pierce,
    Fenner & Smith
    IncorporatedUBS Securities LLCWachovia Capital Markets, LLCA.G. Edwards & Sons,
    Inc.Raymond James &
    Associates, Inc.Total


11,500,000  
        180-day 180-day 16-day 180-day 18-day
  lock-up lock-up lock-up lock-up
 176




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lock-up
   
   
    No Exercise


Full ExercisePer Unit

$



$Total

$



$  
   
         177




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VALIDITY
    OF THE COMMON UNITS   
 EXPERTS   178




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WHERE YOU
    CAN FIND MORE INFORMATION  Form S-l 1-800-SEC-0330.
   FORWARD-LOOKING
    STATEMENTS



Some of the information in this prospectus may contain
    forward-looking statements. These statements can be identified
    by the use of forward-looking terminology including
    may, believe, expect,
    anticipate, estimate,
    continue, or other similar words. These statements
    discuss future expectations, contain projections of results of
    operations or of financial condition, or state other
    forward-looking information. These forward-looking
    statements involve risks and uncertainties. When considering
    these forward-looking statements, you should keep in mind the
    risk factors and other cautionary statements in this prospectus.
    The risk factors and other factors noted throughout this
    prospectus could cause our actual results to differ materially
    from those contained in any forward-looking statement.

179




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##### 



INDEX TO
    FINANCIAL STATEMENTS  
  
 SPECTRA ENERGY PARTNERS, LP
    UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS:Introduction


F-2Unaudited Pro Forma
    Combined Statement of Operations for the year ended
    December 31, 2006


F-3Unaudited Pro Forma
    Combined Balance Sheet as of December 31, 2006


F-4Notes to the
    Unaudited Pro Forma Combined Financial Statements


F-6SPECTRA ENERGY PARTNERS
    PREDECESSOR COMBINED FINANCIAL STATEMENTS:Report of
    Independent Registered Public Accounting Firm


F-9Combined Statements
    of Operations for the years ended December 31, 2006, 2005,
    and 2004


F-10Combined Balance
    Sheets as of December 31, 2006 and 2005


F-11Combined Statements
    of Cash Flows for the years ended December 31, 2006, 2005,
    and 2004


F-12Combined Statements
    of Parent Net Equity and Comprehensive Income for the years
    ended December 31, 2006, 2005, and 2004


F-13Notes to Combined
    Financial Statements


F-14SPECTRA ENERGY PARTNERS, LP
    FINANCIAL STATEMENTS:Report of
    Independent Registered Public Accounting Firm


F-35Balance Sheet as of
    March 26, 2007


F-36Note to the Balance
    Sheet


F-37SPECTRA ENERGY PARTNERS (DE)
    GP, LP FINANCIAL STATEMENTS:Report of
    Independent Registered Public Accounting Firm


F-38Balance Sheet as of
    March 26, 2007


F-39Note to the Balance
    Sheet


F-40GULFSTREAM NATURAL GAS SYSTEM,
    L.L.C. FINANCIAL STATEMENTS:Report of
    Independent Registered Public Accounting Firm


F-41Statements of
    Operations for the years ended December 31, 2006, 2005 and
    2004


F-42Balance Sheets as
    of December 31, 2006 and 2005


F-43Statements of Cash
    Flows for the years ended December 31, 2006, 2005 and
    2004


F-44Statements of
    Members Equity for the years ended December 31, 2006,
    2005, and 2004


F-45Statements of
    Comprehensive Income


F-46Notes to Financial
    Statements


F-47MARKET HUB PARTNERS HOLDING,
    LLC CONSOLIDATED FINANCIAL STATEMENTS:Report of
    Independent Registered Public Accounting Firm


F-54Consolidated
    Statements of Operations for the years ended December 31,
    2006, 2005, and 2004


F-55Consolidated
    Balance Sheets as of December 31, 2006 and 2005


F-56Consolidated
    Statements of Cash Flows for the years ended December 31,
    2006, 2005, and 2004


F-57Consolidated
    Statements of Members Equity for the years ended
    December 31, 2006, 2005, and 2004


F-58Notes to
    Consolidated Financial Statements


F-59  
  F-1




---



##### Table of Contents



UNAUDITED
    PRO FORMA COMBINED FINANCIAL STATEMENTS
 Introduction          
    Spectra Energy or its subsidiaries will contribute certain of
    their assets to us or our subsidiaries;
    we will issue to Spectra Energy Partners (DE) GP, LP, a
    subsidiary of Spectra Energy, a 2% general partner interest in
    us and all of our incentive distribution rights, which will
    entitle our general partner to increasing percentages of the
    cash we distribute in excess of $0.3738 per unit per
    quarter (115% of the minimum quarterly distribution);
    we will issue 11,500,000 common units to the public in this
    offering, representing an 18.4% limited partner interest in us,
    and will use the proceeds as described in Use of
    Proceeds; 
  
    we will enter into a new $500 million credit facility under
    which we expect to borrow $200 million in term debt and
    $125 million in revolving debt; and 
  
    we will enter into an omnibus agreement with Spectra Energy, our
    general partner and certain of their affiliates pursuant to
    which:  
    we will reimburse Spectra Energy for the payment of certain
    operating expenses and for providing various general and
    administrative services.   F-2




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS, LP
 UNAUDITED
    PRO FORMA COMBINED STATEMENT OF OPERATIONS

Year Ended December 31, 2006 Spectra Energy








Spectra EnergyPartners Predecessor


Pro Forma





Partners, LPHistorical


Adjustments





Pro Forma(In thousands, except unit and per unit data)Operating RevenuesTransportation of natural gas

$
80,577


$







$
80,577Storage of natural gas


2,032











2,032Total operating revenues


82,609











82,609Operating ExpensesOperations, maintenance and other


21,831











21,831Depreciation and amortization


18,986











18,986Property and other taxes


4,177











4,177Total operating expenses


44,994











44,994Operating Income


37,615











37,615Other Income and
    ExpensesEquity in earnings of
    unconsolidated affiliates


41,105











41,105Other income, net


1,765











1,765Total other income and expenses


42,870











42,870Interest Income


15



10,600
(a)






10,615Interest Expense


8,151



18,600
(a)






26,951200
(b)Earnings before Income
    Taxes


72,349



(8,200
)






64,149Income Tax Expense


10,741



(10,288
)(c)






453Net Income

$
61,608


$
2,088






$
63,696General partners interest in
    net income













$
1,274Limited partners interest in
    net income













$
62,423Net income per limited
    partners unitCommon units













$
1.30Subordinated units













$
0.45Weighted average number of limited
    partners units outstandingCommon units














41,312,011Subordinated units














20,030,066  
   F-3




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS, LP



UNAUDITED
    PRO FORMA COMBINED BALANCE SHEET December 31,
    2006
  
 Spectra Energy





Spectra EnergyPartners Predecessor


Pro Forma


Partners, LPHistorical


Adjustments


Pro Forma(In thousands)ASSETSCurrent AssetsCash and cash equivalents

$



$
230,000
(d)

$
8,693(20,307
)(e)(200,000
)(f)200,000
(g)125,000
(h)(1,000
)(i)(325,000
)(j)Accounts receivableTrade


9,098



(9,098
)(k)


Natural gas imbalance receivables


3,077







3,077Natural gas imbalance
    receivables  affiliates


4,615







4,615Inventory


2,460







2,460Taxes receivable 
    affiliates


1,488







1,488Other


38







38Short-term investments






200,000
(f)


200,000Total current assets


20,776



199,595



220,371Investments and Other
    AssetsInvestment in unconsolidated
    affiliates


442,793



(6,029
)(k)


431,081(5,273
)(l)(410
)(m)Goodwill


118,293







118,293Total investments and other assets


561,086



(11,712
)


549,374Property, Plant and
    EquipmentCost


800,053







800,053Less accumulated depreciation and
    amortization


(108,233
)






(108,233
)Net property, plant and equipment


691,820







691,820Regulatory Assets and Deferred
    Debits


10,900



1,000
(i)


11,900Total Assets

$
1,284,582


$
188,883


$
1,473,465  
   F-4




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS, LP
   UNAUDITED
    PRO FORMA COMBINED BALANCE SHEET
 December 31,
    2006
  
 Spectra Energy





Spectra EnergyPartners Predecessor


Pro Forma


Partners, LPHistorical


Adjustments


Pro Forma(In thousands)LIABILITIES AND PARTNERS
    CAPITAL/ PARENT NET EQUITYCurrent LiabilitiesAccounts payable trade

$
122


$



$
122Accounts payable trade 
    affiliates


2,115







2,115Taxes accrued


3,419



(2,019
)(c)


1,400Taxes accrued 
    affiliates


3,337



(3,337
)(c)


0Interest accrued


357







357Accrued liabilities


8,917







8,917Natural gas imbalance payables


1,103







1,103Natural gas imbalance
    payables  affiliate


3,367







3,667Other


2,810



(795
)(l)


2,015Total current liabilities


25,547



(6,151
)


19,396Long-term Debt


150,000



200,000
(g)


475,000125,000
(h)Deferred Credits and Other
    LiabilitiesDeferred income taxes


113,011



(108,241
)(c)


4,770Other


6,899







6,899Total deferred credits and other
    liabilities


119,910



(108,241
)


11,669Partners Capital/Parent
    Net EquityParent net investment


985,333



(4,478
)(l)


113,597
(c)(325,000
)(j)(15,127
)(k)(410
)(m)(753,915
)(n)Accumulated other comprehensive
    income


3,792







3,792Common unitholders 
    public






230,000
(d)


209,693(20,307
)(e)Common unitholders 
    sponsor






439,890
(n)


439,890Convertible subordinated
    unitholders  sponsor






295,553
(n)


295,553General partner interest






18,472
(n)


18,472Total partners
    capital/parent net equity


989,125



(21,725
)


967,400Total Liabilities and
    Partners Capital/Parent Net Equity

$
1,284,582


$
188,883


$
1,473,465  
   F-5




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS, LP
 NOTES TO
    UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS  1.  Basis
    of Presentation, The Offering and Other Transactions
      
    East Tennessees and Market Hubs distribution of
    accounts receivable of $9.1 million and $12.1 million,
    respectively, to Spectra Energy Corp;
    The net proceeds to Spectra Energy Partners, LP of
    $215.6 million from the issuance and sale of
    11.5 million common units at an initial offering price of
    $20.00 per unit, and the payment of underwriting commissions of
    $14.4 million; 
  
    Spectra Energy Partner, LPs borrowings under a new
    $500 million credit facility of $200 million in term
    debt and $125 million in revolving debt; 
 
  
    The use of proceeds and borrowings to pay transaction expenses
    and underwriting commissions, replenish working capital, and
    invest in U.S. Treasury, and other qualifying
    securities; and 
  
    Spectra Energy will indemnify us for certain environmental and
    tax liabilities and title and right-of-way defects. 
  Schedule K-1
 
  2.  Pro
    Forma Adjustments and Assumptions
 
   
 
   
     F-6




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS, LP
  NOTES TO
    UNAUDITED PRO FORMA COMBINED FINANCIAL
    STATEMENTS  (Continued)
   
 
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
  
    $439.9 million for 29,812,011 common units purchased by
    Spectra Energy;
    $295.5 million for 20,030,066 subordinated units; and
    $18.5 million for 1,251,879 general partner units.   
   
 
  one-for-one
 
   F-7




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS, LP
  NOTES TO
    UNAUDITED PRO FORMA COMBINED FINANCIAL
    STATEMENTS  (Continued)
  3.  Pro
    Forma Net Income per Unit
 
   
 
   
 F-8




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM               
   
  
 F-9




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
 COMBINED
    STATEMENTS OF OPERATIONS  
 Years Ended December 31,2006


2005


2004(In thousands)Operating RevenuesTransportation of natural gas

$
80,531


$
77,553


$
69,242Transportation of natural gas -
    affiliates


46



150



9,352Storage of natural gas and other


2,032



2,300



3,122Total operating revenues


82,609



80,003



81,716Operating ExpensesOperations, maintenance and other


8,970



16,680



19,679Operations, maintenance and other
    - affiliates


12,861



7,968



6,402Depreciation and amortization


18,986



23,640



21,492Property and other taxes


4,177



5,264



518Total operating expenses


44,994



53,552



48,091Operating Income


37,615



26,451



33,625Other Income and
    ExpensesEquity in earnings of
    unconsolidated affiliates


41,105



46,287



35,495Other income, net


1,765



528



1,485Total other income and expenses


42,870



46,815



36,980Interest Income


15



24



6Interest Expense


8,151



8,506



8,258Earnings before Income
    Taxes


72,349



64,784



62,353Income Tax Expense


10,741



7,834



9,202Net Income

$
61,608


$
56,950


$
53,151  
   F-10




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR



COMBINED
    BALANCE SHEETS  December 31,2006


2005(In thousands)ASSETSCurrent AssetsAccounts receivableTrade, net of allowance for
    doubtful accounts of $241 thousand, and $274 thousand,
    respectively

$
9,098


$
8,898Natural gas imbalance receivables


3,077



3,577Natural gas imbalance receivables
    - affiliates


4,615



21,363Inventory


2,460



1,503Taxes receivable - affiliates


1,488



1,156Other


38



331Total current assets


20,776



36,828Investments and Other
    AssetsInvestment in unconsolidated
    affiliates


442,793



422,340Goodwill


118,293



118,293Total investments and other assets


561,086



540,633Property, Plant and
    EquipmentCost


800,053



706,669Less accumulated depreciation and
    amortization


(108,233
)


(90,353
)Net property, plant and equipment


691,820



616,316Regulatory Assets and Deferred
    Debits


10,900



8,995Total Assets

$
1,284,582


$
1,202,772LIABILITIES AND NET PARENT
    EQUITYCurrent LiabilitiesAccounts payable trade

$
122


$
2,061Accounts payable trade - affiliates


2,115



974Taxes accrued


3,419



4,163Taxes accrued - affiliates


3,337



5,820Interest accrued


357



357Accrued liabilities


8,917



14,967Natural gas imbalance payables


1,103



7,673Natural gas imbalance payables -
    affiliates


3,367



20,143Other


2,810



896Total current liabilities


25,547



57,054Long-term Debt


150,000



150,000Deferred Credits and Other
    LiabilitiesDeferred income taxes


113,011



96,811Other


6,899



3,211Total deferred credits and other
    liabilities


119,910



100,022Commitments and
    ContingenciesParent Net EquityParent net investment


985,333



891,586Accumulated other comprehensive
    income


3,792



4,110Total parent net equity


989,125



895,696Total Liabilities and Parent
    Net Equity

$
1,284,582


$
1,202,772    F-11




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR



COMBINED
    STATEMENTS OF CASH FLOWS  Years Ended December 31,2006


2005


2004(In thousands)CASH FLOWS FROM OPERATING
    ACTIVITIESNet Income

$
61,608


$
56,950


$
53,151Adjustments to reconcile net
    income to net cash provided by operating activitiesDepreciation and amortization


18,986



23,640



21,492Equity in earnings of
    unconsolidated affiliates


(41,105
)


(46,287
)


(35,495
)Allowance for funds used during
    construction  equity


(1,760
)


(506
)


(1,483
)Distributions received from equity
    investments


20,335



29,645



13,720Deferred income taxes


12,813



4,369



31,165(Increase) decrease inAccounts receivable


301



(1,804
)


(2,757
)Accounts receivable - affiliates


(252
)


2,738



1,909Taxes receivable - affiliates






6,121



11,630Other current assets


(878
)


68



1,207Other assets


(7,725
)


32



2,145Increase (decrease) inAccounts payable


58



757



(4,526
)Accounts payable - affiliates


(856
)


930



(261
)Accrued taxes


(401
)


1,838



(1,785
)Accrued taxes - affiliates


(2,944
)


5,689



347Other current liabilities


(9,033
)


6,038



(1,336
)Other current liabilities -
    affiliates


106



(4,421
)


(1,861
)Other liabilities


13,025



7,475



(3,275
)Net cash provided by operating
    activities

$
62,278


$
93,272


$
83,987CASH FLOWS FROM INVESTING
    ACTIVITIESCapital expenditures


(85,910
)


(59,316
)


(34,269
)Distributions received from equity
    investments






152,143



Net cash (used in) provided by
    investing activities

$
(85,910
)

$
92,827


$
(34,269
)CASH FLOWS FROM FINANCING
    ACTIVITIESMembers dividend (East
    Tennessee Natural Gas)










(3,000
)Transfers from (to) Parent, net


23,632



(186,099
)


(46,718
)Net cash provided by (used in)
    financing activities

$
23,632


$
(186,099
)

$
(49,718
)Net change in cash and cash
    equivalents

$



$



$
Cash and cash equivalents at
    beginning of the period










Cash and cash equivalents at
    end of the period

$



$



$
Supplemental
    DisclosuresCash paid for interest, net of
    amount capitalized

$
8,591


$
8,566


$
12,955Cash paid (refunded) to (from)
    Parent for income taxes


1,086



(5,518
)


(37,369
)Significant non-cash transactions:Transfer of assets from affiliate

$
(8,506
)

$



$
Contribution of assets to affiliate






4,018



Deferred taxes related to transfer
    of assets from affiliate


2,958







Gas imbalances receivables


17,248



(24,940
)


(1,005
)Property, plant and equipment
    accruals


1,554



12,220



(20,893
)Capitalization of development costs


5,701







    F-12




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR



COMBINED
    STATEMENTS OF PARENT NET EQUITY AND COMPREHENSIVE
    INCOME  Accumulated OtherParent Net


Comprehensive


Parent NetInvestment


Income (Loss)


Equity(In thousands)Balance January 1,
    2004

$
1,021,321


$



$
1,021,321Net income


53,151







53,151Members dividends


(3,000
)






(3,000
)Net transfers to parent


(46,719
)






(46,719
)Balance December 31,
    2004

$
1,024,753


$



$
1,024,753Net income


56,950







56,950Other comprehensive incomeNet unrealized gains on cash flow
    hedges






4,167



4,167Reclassification into earnings
    from cash flow hedges






(57
)


(57
)Total comprehensive income










61,060Net transfers to parent


(190,117
)






(190,117
)Balance December 31,
    2005

$
891,586


$
4,110


$
895,696Net income


61,608







61,608Other comprehensive lossReclassification into earnings
    from cash flow hedges






(318
)


(318
)Total comprehensive income










61,290Net transfers from parent


32,139







32,139Balance December 31,
    2006

$
985,333


$
3,792


$
989,125    F-13




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS
 Years Ended December 31, 2006, 2005 and 2004
  1.
    Description
    of Business and Basis of Presentation        20%-to 50%-owned
        
    Spectra Energy Capital managed its cash on a centralized basis
    for the entire Duke Energy consolidated group, which in the
    three years ended December 31, 2006, included the various
    assets and operations of the companies comprising the Company.
    The individual cash accounts maintained at the business unit
    levels (i.e. within the Companys entities) were swept to a
    Spectra Energy Capital corporate account on a daily basis,
    creating an Advance Receivable between Spectra Energy Capital
    (or other affiliates/corporate entities) and Company units.
    Therefore, the Companys F-14




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
  financials do not reflect any cash balances. These net advances
    do not bear interest and are carried as unsecured, intercompany
    balances. Spectra Energy and the Companys operating units
    expect to settle the cumulative advance balances through equity
    distributions or contributions, as applicable, prior to
    contribution of these units to the Partnership. Therefore, the
    consolidated net advances have been reclassified to Parent Net
    Equity in the Companys combined balance sheets.  
    The Companys financing requirements have been managed
    historically with cash generated by operations and debt
    issuances, as needed, by the Companys businesses.
    Therefore, Spectra Energy Capitals corporate-level debt
    issuances and related interest amounts, which generally financed
    operations outside of the Companys operations, are not
    included in the Companys historical combined financial
    statements.      
    Business services, such as payroll, accounts payable and
    facilities management,
    Corporate services, such as finance and accounting, legal, human
    resources, investor relations, public and regulatory policy, and
    senior executives,
    Pension and other post-retirement benefit costs.      2.
    Summary
    of Significant Accounting Policies  Use of Estimates .
  Inventory.
  Cost-Based Regulation
 F-15




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
    Goodwill
      Property, Plant and
    Equipment
    Asset Retirement Obligations.
 F-16




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
    right-of-way
    Unamortized Debt Expense
  Long-Lived Asset Impairment and Assets Held For
    Sale
      Equity Method Investments.
 
  Cash Flow Hedges.
 
 
 F-17




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
 
 
   
  Natural Gas Imbalances
  Environmental Expenditures
  Revenue Recognition
  Significant Customers
  % of RevenuesYears EndedDecember 31,Customer

2006


2005


2004Atmos Energy Corporation


18
%


16
%


16
%KGEN Murray I and II, LLC


13
%


14
%


(1
)Knoxville Utilities Board


(1
)


10
%


10
%Duke Energy Murray, LLC


(2
)


(2
)


10
%     (1)
  (2)
  Allowance for Funds Used During Construction
    (AFUDC)
 F-18




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
    Income Taxes
      Segment
    Reporting
  Distributions from Equity
    Investees
 F-19




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
   New Accounting Standards.
  FSP
    No. FAS 115-1
    and 124-1,
    The Meaning of
    Other-Than-Temporary
    Impairment and its Application to Certain
    Investments. No. FAS 115-1 124-1 other-than-temporary other-than-temporary Not-for-Profit No. FAS 115-1 124-1
  FERC Accounting Order.
  SAB No. 108, Considering the Effects of Prior
    Year Misstatements When Quantifying Misstatements in Current
    Year Financial Statements (SAB No. 108)
   F-20




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
    SFAS No. 153, Exchanges of Nonmonetary
    Assets  an amendment of APB Opinion
    No. 29.
  SFAS No. 154 Accounting Changes and Error
    Corrections, or SFAS 154. Accounting Changes Reporting Accounting Changes in
    Interim Financial Statements.
  FIN 47 Accounting for Conditional Asset Retirement
    Obligations.
  FSP
    No. APB 18-1,
    Accounting by an Investor for Its Proportionate Share of
    Accumulated Other Comprehensive Income of an Investee Accounted
    for under the Equity Method in Accordance with APB Opinion
    No. 18 upon a Loss of Significant
    Influence. No. APB 18-1 No. APB 18-1
 F-21




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
  No. APB 18-1 No. APB 18-1
    FIN 46 Consolidation of Variable Interest
    Entities. and/or
          FIN 48, Accounting for Uncertainty in
    Income Taxes  an interpretation of FASB Statement
    No. 109.
 F-22




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
    SFAS No. 159 The Fair Value Option for
    Financial Assets and Financial Liabilities  including
    an amendment of FAS 115, or SFAS 159.
  SFAS No. 157, Fair Value Measurements.
  3.
    Transactions
    with Affiliates   F-23




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
    Statement
    of Operations
 Years Ended December 31,2006


2005


2004(In thousands)Transportation of natural gas(1)

$
46


$
150


$
9,352Operation and maintenance
    expenses(2)


12,861



7,968



6,402     (1)
    
    In the normal course of business, the Company provides natural
    gas transportation, storage and other services to affiliates.(2)
    
    Includes operation and maintenance costs incurred by the Company
    in relation to those natural gas storage and other services
    provided to Spectra Energy Capital and its affiliates as
    identified above. Additionally includes costs the Company has
    incurred as allocations of various overhead charges that are
    based either on the cost of actual service received or using
    various allocation methodologies based on the Companys
    percentage of assets, employees, earnings or other measures, as
    compared to Spectra Energy Capital affiliates.  Balance
    Sheet
 December 31,2006


2005(In thousands)Natural gas imbalance receivable

$
4,615


$
21,363Accounts payable


2,115



974Taxes accrued


3,337



5,820Natural gas imbalance payables


3,367



20,143Taxes receivable


1,488



1,156         4.
    Business
    Segments       F-24




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
          Business
    Segment Data
 Segment EBIT /Combined





Capital andEarnings before


Depreciation and


InvestmentTotal Revenues


Income Taxes


Amortization


Expenditures(In thousands)Year Ended December 31,
    2006East Tennessee

$
82,609


$
42,096


$
18,986


$
85,910Other






38,404







Total


82,609



80,500



18,986



85,910Interest expense






8,151







Total combined

$
82,609


$
72,349


$
18,986


$
85,910Year Ended December 31,
    2005East Tennessee

$
80,003


$
28,722


$
23,640


$
59,316Other






44,568







Total


80,003



73,290



23,640



59,316Interest expense






8,506







Total combined

$
80,003


$
64,784


$
23,640


$
59,316Year Ended December 31,
    2004East Tennessee

$
81,716


$
36,464


$
21,492


$
34,269Other






34,147







Total


81,716



70,611



21,492



34,269Interest expense






8,258







Total combined

$
81,716


$
62,353


$
21,492


$
34,269   Segment
    Assets
  December 31,2006


2005(In thousands)East Tennessee

$
841,789


$
780,432Other


442,793



422,340Total combined

$
1,284,582


$
1,202,772  F-25




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
  5.
    Regulatory
    Matters  Regulatory Assets.
  December 31,


Recovery/Refund2006


2005


Period Ends(In thousands)Regulatory Assets(1)Regulatory asset related to income
    taxes(2)

$
8,481


$
7,711



(3)Vacation accrual (non-current)(2)


1,989



812



2007Total Regulatory Assets

$
10,470


$
8,523       (1)
    
    Included in Other Regulatory Assets and Deferred Debits on the
    Combined Balance Sheets.(2)
    
    These amounts are expected to be included in future rate filings.(3)
    
    Recovery/refund period currently unknown.  East Tennessee.
  Gulfstream.
   F-26




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
  6.
    Income
    Taxes  Income
    Tax Expense
  For the Years EndedDecember 31,2006


2005


2004(In thousands)Current income taxesFederal

$
(1,622
)

$
3,240


$
(22,210
)(1)State


(450
)


225



247Total current income taxes


(2,072
)


3,465



(21,963
)Deferred income taxesFederal


11,489



3,068



31,094
(1)State


1,324



1,301



71Total deferred income taxes


12,813



4,369



31,165Total income tax expense presented
    in Combined Statements of Operations

$
10,741


$
7,834


$
9,202   (1)
    Current and deferred federal income taxes in 2004 were impacted
    by an organizational restructuring undertaken by the
    Companys parent, Spectra Energy.  Reconciliation
    of Income Tax Expense at the U.S. Federal Statutory Income
    Tax Rate to Actual Tax Expense (Statutory Rate
    Reconciliation)
  For the Years EndedDecember 31,2006


2005


2004Income tax expense, computed at
    the statutory rate of 35%

$
25,322


$
22,674


$
21,824State income tax, net of federal
    income tax effect


568



992



206Entities not subject to income tax


(14,387
)


(16,200
)


(12,423
)Other items, net


(763
)


368



(405
)Total income tax expense from
    operations

$
10,741


$
7,834


$
9,202Effective tax rate


14.8
%


12.1
%


14.8
%   Net
    Deferred Income Tax Liability Components
  December 31,2006


2005Deferred credits and other
    liabilities

$
3,365


$
6,819Valuation allowance






Net deferred income tax assets


3,365



6,819Accelerated depreciation rates


(112,041
)


(100,253
)State deferred income tax, net of
    federal tax effect


(4,335
)


(3,377
)Total deferred income tax
    liabilities


(116,376
)


(103,630
)Total net deferred income tax
    liabilities

$
(113,011
)

$
(96,811
)  F-27




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
 
  7.
    Interest
    Rate, Credit Risk and Financial Instruments 
  Credit Risk.
    Interest Rate.
  Financial Instruments.
 
  
 December 31,Approximate





ApproximateBook Value


Fair Value


Book Value


Fair Value2006


2005(In thousands)Long-term debt(1)

$
150,000


$
150,065


$
150,000


$
152,924     (1)
    
    There are no current maturities.    8.
    Deferred
    Revenues   F-28




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
  9.
    Investments
    in Unconsolidated Affiliates and Related Transactions        Investment
    in Unconsolidated Affiliates
  December 31,2006


2005(In thousands)Gulfstream

$
186,354


$
190,243Market Hub


256,439



232,097Total

$
442,793


$
422,340   Equity
    in Earning of Unconsolidated Affiliates
  For the Years EndedDecember 31,2006


2005


2004(In thousands)Gulfstream

$
16,763


$
16,611


$
11,081Market Hub


24,342



29,676



24,414Total

$
41,105


$
46,287


$
35,495  F-29




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
  Summarized
    Combined Financial Information of Unconsolidated
    Affiliates
  December 31,2006


2005(In thousands)Balance SheetsCurrent assets

$
104,919


$
190,901Non-current assets


2,228,787



2,106,631Current liabilities


179,925



150,562Non-current liabilities


855,734



881,490Net assets

$
1,298,047


$
1,265,480   Years Ended December 31,2006


2005


2004(In thousands)Statement of
    OperationsOperating revenues

$
259,062


$
223,033


$
159,458Operating expenses


101,528



73,310



61,225Net income


117,106



127,153



94,057   10.
    Property,
    Plant and Equipment  Estimated


December 31,Useful Life


2006


2005(In thousands)Land


N/A


$
1,054


$
1,054Natural gas transmission


50 years



757,345



651,531Equipment


3-10 years



3,392



3,220Vehicles


3-5 years



2,415



2,453Construction in process


N/A



12,265



25,823Other


5-33 years



23,582



22,588Total property, plant and equipment






800,053



706,669Total accumulated depreciation






(108,233
)


(90,353
)Total net property, plant and
    equipment





$
691,820


$
616,316       East Tennessee
 F-30




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
      11.
    Debt  Long-term Debt.
  Restrictive Debt Covenants.
 
   
 
  Change in Control Covenant.
 
  12.
    Commitments
    and Contingencies  General Insurance.
 F-31




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
     Environmental.
  Litigation and Legal Proceedings.
      Other Commitments and
    Contingencies.
  Less than 1








More Than 5Year


2-3 Years


4-5 Years


YearsTotal


(2007)


(2008 & 2009)


(2010 & 2011)


(Beyond 2011)(in thousands)Long-term debt(1)

$
150,000


$



$



$



$
150,000Interest on debt obligations(2)


51,390



8,565



17,130



17,130



8,565Material/capital purchases


894



894







Right of way payments(3)


5,017



5,017Total contractual cash obligations

$
207,301


$
14,476


$
17,130


$
17,130


$
158,565   (1)
    
    Represents future principal repayments of notes payable.(2)
    
    Represents interest expense on notes payable, based on the
    stated interest rate on the notes of 5.71%.(3)
    
    Represents capital commitments for various right of way matters.  Leases.
   F-32




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
  13. Stock-Based
    Compensation
      14. Employee
    Benefit Plans
  Duke Energy U.S. Retirement
    Plan.
            Duke Energy U.S. Other Post-Retirement
    Benefits.
 F-33




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
     F-34




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
 REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
        
    F-35




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
 SPECTRA
    ENERGY PARTNERS, LP



BALANCE
    SHEET

March 26,
    2007 ASSETSTotal assets

$
PARTNERS EQUITYPartners EquityLimited partners equity

$
2,940General partners equity


60Less receivables from Spectra
    Energy Corp and Spectra Energy Partners (DE) GP, LP


(3,000
)Total liabilities and
    partners equity

$
    F-36




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  NOTES TO
    COMBINED FINANCIAL STATEMENTS  (Continued)
  SPECTRA
    ENERGY PARTNERS, LP
  NOTE TO
    THE BALANCE SHEET
  1.
    Nature of
    Operations       F-37




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
            F-38




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS (DE) GP, LP
    BALANCE SHEET
    MARCH 26, 2007 ASSETSInvestment in Spectra Energy
    Partners, LP


60Total assets

$
60LIABILITIES AND PARTNERS
    EQUITYPayable to Spectra Energy
    Partners, LP

$
60Partners EquityLimited partners equity


990General partners equity


10Less receivable from Spectra
    Energy Corp and its subsidiaries


(1,000
)Total partners
    equity


Total liabilities and
    partners equity

$
60    F-39




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS (DE) GP, LP
  NOTE TO
    THE BALANCE SHEET
  1.
    Nature of
    Operations       F-40




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
            F-41




---



##### Table of Contents



GULFSTREAM
    NATURAL GAS SYSTEM, L.L.C.
 STATEMENTS
    OF OPERATIONS  
 Years Ended December 31,2006


2005


2004(In thousands)Operating RevenuesTransportation of natural gas

$
178,768


$
140,287


$
90,411Other


1,489



4,817



3,204Total operating revenues


180,257



145,104



93,615Operating ExpensesOperations and maintenance


7,234



1,542



1,750Operations and
    maintenance  affiliates


7,992



7,755



7,705Depreciation and amortization


30,406



29,190



25,354Property and other taxes


17,847



15,060



7,839Total operating expenses


63,479



53,547



42,648Operating Income


116,778



91,557



50,967Gains on Sales of Other Assets
    and Other, net


78







Other Income and
    ExpensesAllowance for funds used during
    construction  equity


241



1,113



3,107Other income and expenses, net


112



670



246Total other income and expenses


353



1,783



3,353Interest ExpenseLong-term debt


48,911



27,029



13,248Allowance for funds used during
    construction  borrowed


(124
)


(1,489
)


(4,156
)Total interest expense


48,787



25,540



9,092Net Income

$
68,422


$
67,800


$
45,228  
   F-42




---



##### Table of Contents



GULFSTREAM
    NATURAL GAS SYSTEM, L.L.C.
 BALANCE
    SHEETS  December 31,2006


2005(In thousands)ASSETSCurrent
    AssetsCash and cash equivalents

$
29,426


$
27,255Accounts receivable


14,964



19,096Other


2,292



2,434Total current assets


46,682



48,785Property, Plant and
    EquipmentCost


1,719,116



1,708,436Less accumulated depreciation and
    amortization


123,866



93,524Net property, plant and equipment


1,595,250



1,614,912Deferred
    ChargesAllowance for funds used during
    construction  gross up


22,490



22,731Unamortized debt expense


7,878



8,278Other


230



192Total deferred charges


30,598



31,201Total Assets

$
1,672,530


$
1,694,898LIABILITIES AND MEMBERS
    EQUITYCurrent
    LiabilitiesAccounts payable

$
2,004


$
5,715Accounts payable 
    affiliates


903



834Accrued taxes


13,983



5,933Accrued interest


8,244



8,931Other liabilities


5,719



6,594Fuel tracker liabilities


2,455



5,493Other


1,345



2,160Total current liabilities


34,653



35,660Other Long-term
    Liabilities


6,160



11,441Long-term Debt


849,571



849,534Commitments and
    ContingenciesMembers
    EquityMembers equity


766,668



781,487Accumulated other comprehensive
    income


15,478



16,776Total members equity


782,146



798,263Total Liabilities and
    Members Equity

$
1,672,530


$
1,694,898    F-43




---



##### Table of Contents



GULFSTREAM
    NATURAL GAS SYSTEM, L.L.C.
 STATEMENTS
    OF CASH FLOWS  Years Ended December 31,2006


2005


2004(In thousands)CASH FLOWS FROM OPERATING
    ACTIVITIESNet income

$
68,422


$
67,800


$
45,228Adjustments to reconcile net income
    to net cash provided by operating activities:Depreciation and amortization


31,099



33,716



30,679Allowance for funds used during
    construction  equity


(241
)


(1,113
)


(3,107
)Gains on sales of assets


(78
)






Reclassification adjustments from
    accumulated other comprehensive income into net income


(1,298
)


(234
)


(Increase) decrease
    inAccounts receivable


3,772



(9,698
)


420Other current assets


(545
)


(143
)


3,575Deferred charges


2,814



402



(642
)Increase (decrease)
    inAccount payable


994



(2,066
)


102Accrued taxes


8,050



4,861



(1,264
)Accrued interest


(687
)


6,709



1,573Accrued liabilities


(875
)


5,830



(172
)Fuel tracker liabilities


(2,260
)


2,962



Other current liabilities


3,197



2,940



223Long-term liabilities


(5,281
)


(108
)


2Net cash provided by operating
    activities


107,083



111,858



76,617CASH FLOWS FROM INVESTING
    ACTIVITIESCapital expenditures


(21,654
)


(62,206
)


(124,057
)Net cash used in investing
    activities


(21,654
)


(62,206
)


(124,057
)CASH FLOWS FROM FINANCING
    ACTIVITIESMembers distributions


(83,000
)


(741,990
)


(56,000
)Proceeds from the settlement of
    hedge instruments






17,010



Proceeds from the issuance of
    long-term debt






892,069



128,257Payments for the redemption of
    long-term debt






(217,680
)


Payments for debt issuance costs


(258
)


(8,399
)


Net cash (used in) provided by
    financing activities


(83,258
)


(58,990
)


72,257Net change in cash and cash
    equivalents


2,171



(9,338
)


24,817Cash and cash equivalents at
    beginning of year


27,255



36,593



11,776Cash and cash equivalents at end
    of year

$
29,426


$
27,255


$
36,593Supplemental
    DisclosuresCash paid for interest, net of
    amounts capitalized

$
49,423


$
15,794


$
6,349Significant non-cash transactions:Property, plant and equipment
    accruals


2,204







Gas imbalances payable


778



2,531



492Allowance for funds used during
    construction-gross up


(241
)


274



1,431Contribution in aid of construction






16,685



Hurricane insurance receivable










(4,783
)    F-44




---



##### Table of Contents



GULFSTREAM
    NATURAL GAS SYSTEM, L.L.C.
 STATEMENTS
    OF MEMBERS EQUITY  Spectra Energy


The WilliamsCapital, LLC


Companies


Total(In thousands)Balance January 1, 2004

$
732,372


$
732,372


$
1,464,744Members distributions


(28,000
)


(28,000
)


(56,000
)Attributed deferred tax benefit


715



716



1,431Net income


22,614



22,614



45,228Balance December 31, 2004

$
727,701


$
727,702


$
1,455,403Members distributions


(370,995
)


(370,995
)


(741,990
)Attributed deferred tax benefit


137



137



274Other comprehensive income


8,505



8,505



17,010Reclassification into earnings
    from cash flow hedges


(117
)


(117
)


(234
)Net income


33,900



33,900



67,800Balance December 31, 2005

$
399,131


$
399,132


$
798,263Members distributions


(41,500
)


(41,500
)


(83,000
)Attributed deferred tax benefit


(120
)


(121
)


(241
)Reclassification into earnings
    from cash flow hedges


(649
)


(649
)


(1,298
)Net income


34,211



34,211



68,422Balance December 31, 2006

$
391,073


$
391,073


$
782,146    F-45




---



##### Table of Contents



GULFSTREAM
    NATURAL GAS SYSTEM, L.L.C.
  STATEMENTS
    OF COMPREHENSIVE INCOME
  Years Ended December 31,2006


2005


2004(In thousands)Net Income

$
68,422


$
67,800


$
45,228Other comprehensive
    incomeNet unrealized gain on cash flow
    hedges


16,776



17,010



Reclassification adjustment into
    earnings


(1,298
)


(234
)


Total other comprehensive income


15,478



16,776



Total Comprehensive
    Income

$
83,900


$
84,576


$
45,228    F-46




---



##### Table of Contents



GULFSTREAM
    NATURAL GAS SYSTEM, L.L.C.
  NOTES TO
    FINANCIAL STATEMENTS
 For the Years Ended December 31, 2006, 2005 and
    2004
  1.
    Nature of
    Operations            2.
    Summary
    of Significant Accounting Policies  Basis of Presentation.
  Use of Estimates.
  Cash and Cash Equivalents.
  Accounting for Hedges.
   F-47




---



##### Table of Contents



GULFSTREAM
    NATURAL GAS SYSTEM, L.L.C.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Cash Flow Hedges. Mark-to-Market
  Valuation.
  Property, Plant and
    Equipment.
    and/or
  right-of-way
 F-48




---



##### Table of Contents



GULFSTREAM
    NATURAL GAS SYSTEM, L.L.C.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      Unamortized Debt Expense.
  Cost-Based Regulation.
  Revenue Recognition.
    Customer
  December 31,2006


2005


2004Florida Power & Light
    Company


51
%


41
%


23
%Florida Power Corporation


22
%


23
%


29
%TECO Energy and subsidiaries


10
%


13
%


(1
)Calpine Energy and subsidiaries


(1
)


(1
)


15
%     (1)
    
    Percentage below 10%  Allowance for Funds Used During Construction
    (AFUDC).
 F-49




---



##### Table of Contents



GULFSTREAM
    NATURAL GAS SYSTEM, L.L.C.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Income Taxes. gross-up
  New Accounting Standards.
  SFAS No. 157, Fair Value Measurements
    (SFAS No. 157).
  3.
    Regulatory
    Matters    FERC Accounting Order.
 F-50




---



##### Table of Contents



GULFSTREAM
    NATURAL GAS SYSTEM, L.L.C.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   4.
    Related
    Party Transactions  Statements
    of Operations
  Years Ended December 31,2006


2005


2004(In thousands)Operation and maintenance expenses

$
7,992


$
7,755


$
7,705   Balance
    Sheets
  December 31,2006


2005(In thousands)Property, plant and equipment(a)

$
2,995


$
12,066Accounts payable


903



834     (a)
    
    Reflects amounts billed in the annual period.      5.
    Gas
    Imbalances    6.
    Property,
    Plant and Equipment  Estimated

December 31,Useful Life

2006


2005(In thousands)Land

N/A

$
18,013


$
18,208Natural gas transmission

60 years


1,642,926



1,634,239Equipment

5-7 years


1,257



1,231Vehicles

5 years


417



417Construction in process

N/A


12,193



10,114Other

5-20 years


44,310



44,227Total property, plant and equipment




1,719,116



1,708,436Total accumulated depreciation




(123,866
)


(93,524
)Total net property, plant and
    equipment



$
1,595,250


$
1,614,912  F-51




---



##### Table of Contents



GULFSTREAM
    NATURAL GAS SYSTEM, L.L.C.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  7.
    Hedging
    Activities, Financial Instruments and Credit Risk  Interest Rate Cash Flow Hedges.
  Financial Instruments.
  Credit Risk.
  Long-term Debt.
  Debt
  December 31,2006


2005(In thousands)Note payable, 5.56%

$
500,000


$
500,000Note payable, 6.19%


350,000



350,000Unamortized debt discount


(429
)


(466
)Total debt

$
849,571


$
849,534Less current maturity






Total Long-term portion

$
849,571


$
849,534   8.
    Commitments
    and Contingencies  General Insurance.
 F-52




---



##### Table of Contents



Environmental.
  Litigation.
  Contractual Obligations.
  Payment
    Due By Period
  Less than


2-3 Years


4-5 Years


More than1 Year


(2008 &


(2010 &


5 YearsTotal


(2007)


2009)


2011)


(Beyond 2011)(In thousands)Long-term debt

$
850,000


$



$



$



$
850,000Operating leases


811



419



284



108



Material/Capital purchases(1)


12,000



6,000



6,000







Total contractual cash obligations

$
862,811


$
6,419


$
6,284


$
108


$
850,000     (1)
    
    The Company entered into a contract in which it will provide a
    $28,000 thousand contribution in aid of construction
    (CIAC), under the provisions of its FERC gas
    tariff, to a customer in six unequal installments through
    December 31, 2008. In return for the $28,000 thousand
    payment, the customer will construct a lateral that will connect
    to the Companys mainline. The customer agreed to execute
    two consecutive Firm Transportation Service (FTS)
    contracts that will be used on the Companys mainline
    system. These contracts combined began on June 1, 2005, and
    will extend through December 31, 2028. The Company has
    recorded an asset of $26,100 thousand which is included within
    Property, Plant and Equipment and a corresponding liability
    which is included in Other Current Liabilities and Long-term
    Liabilities on the Companys Balance Sheets. Through
    December 31, 2006, the Company has paid $16,000 thousand to
    the customer pursuant to the contract. F-53




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM             
    F-54




---



##### Table of Contents



MARKET
    HUB PARTNERS HOLDING, LLC
 CONSOLIDATED
    STATEMENTS OF OPERATIONS  
 Years Ended December 31,2006


2005


2004(In thousands)Operating RevenuesSalt cavern storage revenues

$
75,645


$
64,667


$
56,261Salt cavern storage
    revenues  affiliates


308



3,564



6,787Other


2,851



9,698



2,795Total operating revenues


78,804



77,929



65,843Operating ExpensesOperation and maintenance


14,130



3,635



5,801Operation and
    maintenance  affiliates


12,133



5,832



2,997Depreciation and amortization


7,815



6,938



6,788Property and other taxes


3,970



3,358



2,991Total operating expenses


38,048



19,763



18,577Gain on Sale of Other Assets,
    and Other, net


10,553



1,136



1,539Operating Income


51,309



59,302



48,805Other Income






10



(6
)Interest Income


11



41



30Interest Expense


(2,636
)






Net Income

$
48,684


$
59,353


$
48,829  
   F-55




---



##### Table of Contents



MARKET
    HUB PARTNERS HOLDING, LLC
 CONSOLIDATED
    BALANCE SHEETS  December 31,2006


2005(In thousands)ASSETSCurrent AssetsAccounts receivable, net of
    allowance for doubtful accounts

$
12,058


$
27,791Accounts receivable 
    affiliates






132Inventory


906



6,013Natural gas imbalance receivables


5,957



29,073Natural gas imbalance
    receivables  affiliates


39,316



79,107Total current assets


58,237



142,116Other AssetsAdvances receivable 
    affiliates


94,177



Goodwill, net of accumulated
    amortization


200,497



200,497Other assets


67



1,211Total other assets


294,741



201,708Property, Plant and
    EquipmentCost


370,721



315,141Less accumulated depreciation and
    amortization


62,523



56,331Net property, plant and equipment


308,198



258,810Total Assets

$
661,176


$
602,634LIABILITIES AND MEMBERS
    EQUITYCurrent LiabilitiesAccounts payable

$
6,034


$
714Accounts payable 
    affiliates






516Accrued taxes


1,309



930Natural gas imbalance payables


43,794



108,180Natural gas imbalance
    payables  affiliates


2,485



Collateral liabilities


3,631



2,290Collateral liabilities 
    affiliates


55,000



Other accrued liabilities


8,019



2,272Total current liabilities


120,272



114,902Deferred Credits and Other
    LiabilitiesAdvances payable 
    affiliates






20,511Other


3



4Other  affiliates


25,000



Total deferred credits and other
    liabilities


25,003



20,515Commitments &
    ContingenciesPaid-in capital


290,258



276,382Retained earnings


225,643



190,835Members Equity


515,901



467,217Total Liabilities and
    Members Equity

$
661,176


$
602,634    F-56




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##### Table of Contents



MARKET
    HUB PARTNERS HOLDING, LLC
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS Years Ended December 31,2006


2005


2004(In thousands)CASH FLOWS FROM OPERATING
    ACTIVITIESNet Income

$
48,684


$
59,353


$
48,829Adjustments to reconcile net
    income to net cash provided by operating activities:Depreciation and amortization


7,815



6,938



6,788Gain on sale of other assets


(10,553
)


(1,136
)


(1,539
)(Increase) decrease in:Accounts receivable


5,812



15,728



(36,810
)Accounts receivable 
    affiliates


132



578



128Inventory


6,113



(3,137
)


(808
)Other current assets










260Other assets


21,608



(1,085
)


330Increase (decrease) in:Accounts payable


5,320



(879
)


1,593Accounts payable 
    affiliates


(516
)


516



Accrued taxes


379



(506
)


(214
)Collateral liabilities


1,341



491



1,799Collateral liabilities 
    affiliates


55,000







Other accrued liabilities


2,638



(14,587
)


22,852Deferred credits and other
    liabilities


(2
)


4



(304
)Deferred credits and other
    liabilities  affiliates


25,000







Net cash provided by operating
    activities


168,771



62,278



42,904CASH FLOWS FROM INVESTING
    ACTIVITIESCapital expenditures


(54,083
)


(37,987
)


(17,000
)Net increase in advances
    receivable  affiliates


(94,177
)






Net decrease in advances
    payable  affiliates


(20,511
)


(24,291
)


(28,294
)Proceeds on sale of other assets










2,390Net cash used in investing
    activities


(168,771
)


(62,278
)


(42,904
)Net change in cash and cash
    equivalents










Cash and cash equivalents at
    beginning of year










Cash and cash equivalents at
    end of year

$



$



$
Supplemental
    DisclosuresCash paid for interest, net of
    amounts capitalized

$
43


$



$
Significant non-cash transactions:Gas imbalances


62,907



61,274



1,349Property, plant and equipment
    accruals


4,853



1,771



1,757Property, plant and equipment
    retirements


3,348



978



7,445Interaccount property, plant and
    equipment transfers/reclasses






2,001



11,287Intercompany property, plant and
    equipment transfers










6,132    F-57




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##### Table of Contents



MARKET
    HUB PARTNERS HOLDING, LLC
 CONSOLIDATED
    STATEMENTS OF MEMBERS EQUITY  Total(In thousands)Balance January 1,
    2004

$
359,035Net income


48,829Balance December 31,
    2004

$
407,864Net income


59,353Balance December 31,
    2005

$
467,217Net income


48,684Balance December 31,
    2006

$
515,901    F-58




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##### Table of Contents



MARKET
    HUB PARTNERS HOLDING, LLC
  NOTES
    TO CONSOLIDATED FINANCIAL STATEMENTS
 For
    the Years Ended December 31, 2006, 2005 and 2004
  1.
    Nature of
    Operations      2.
    Summary
    of Significant Accounting Policies  Basis of Presentation.
  Consolidation. -
  Use of Estimates.
  Inventory.
  Goodwill.
   F-59




---



##### Table of Contents



MARKET
    HUB PARTNERS HOLDING, LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Property, Plant and
    Equipment.
    and/or
  right-of-way
    Environmental Expenditures.
  Revenue Recognition.
 F-60




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##### Table of Contents



MARKET
    HUB PARTNERS HOLDING, LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    % of Consolidated RevenuesYears Ended December 31,Customer

2006


2005


2004Northern Indiana Public Service Co


10.6
%


11.2
%


16.2
%   New Accounting Standards.
  SFAS No. 157, Fair Value Measurements
    (SFAS No. 157).
  3.
    Related
    Party Transactions  Consolidated
    Statements of Operations
 Years Ended December 31,2006


2005


2004(In thousands)Storage of natural gas and other
    services (1)

$
308


$
3,564


$
6,787Operation and maintenance expenses
    (2)


12,133



5,832



2,997     (1)
    
    In the normal course of business, the Company provides natural
    gas storage and other services to affiliates.(2)
    
    Includes reimbursement of costs incurred by affiliates on behalf
    of the Company and allocations from Spectra Capital affiliates
    for various services and other costs. Affiliates charge such
    expenses based on the cost of actual services provided or using
    various allocation methodologies based on the Companys
    percentage of assets, employees, earnings, or other measures, as
    compared to other affiliates.  Consolidated
    Balance Sheets
 December 31,2006


2005(In thousands)Accounts receivable

$



$
132Natural gas imbalance receivables


39,316



79,107Accounts payable






516Natural gas imbalance payables


2,485



Collateral liabilities


55,000



Other


25,000



    F-61




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##### Table of Contents



MARKET
    HUB PARTNERS HOLDING, LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     4.
    Gas
    Imbalances    5.
    Property,
    Plant and Equipment  Net
    Property, Plant and Equipment
 Estimated

December 31,Useful Life

2006


2005(In thousands)Land

N/A

$
12,415


$
12,415Salt Cavern Storage facilities

15-40 years


312,787



272,082Equipment

10-40 years


221



217Vehicles

5 years


115



133Constructions in process

N/A


42,583



28,179Other

5 years


2,600



2,115Total property, plant and equipment




370,721



315,141Total accumulated depreciation




(62,523
)


(56,331
)Total net property, plant and
    equipment



$
308,198


$
258,810   6.
    Credit
    Risk  Credit Risk.
  7.
    Commitments
    and Contingencies  General Insurance.
 F-62




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##### Table of Contents



MARKET
    HUB PARTNERS HOLDING, LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Environmental.
  Litigation.
  Leases.
 F-63




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##### Table of Contents



Appendix A
   FIRST
    AMENDED AND RESTATED
    AGREEMENT OF LIMITED PARTNERSHIP
    OF
    SPECTRA ENERGY PARTNERS, LP
  A-1




---



##### Table of Contents



Appendix B  APPLICATION
    FOR TRANSFER OF COMMON UNITS
  SPECTRA ENERGY PARTNERS, LP, c/o Spectra
    Energy Partners GP, LP, 5400 Westheimer Ct., Houston, TX 77056;
    Attn: CFO,
    attorney-in-fact
                  o o o
  o o
     B-1




---



##### Table of Contents



o
  o Important Note
  
  o o
  o
                           B-2




---



##### Table of Contents



B-3




---



##### Table of Contents



SCHEDULE I
  Eligible
    Holders
    
    Individuals (U.S. or
    non-U.S.)
    C corporations (U.S. or
    non-U.S.)
    Tax exempt organizations subject to tax on unrelated business
    taxable income or UBTI, including IRAs, 401(k) plans
    and Keough accounts
    S corporations with shareholders that are individuals,
    trusts or tax exempt organizations subject to tax on UBTI  Potentially
    Eligible Holders
  
    S corporations (unless they have ESOP shareholders*()
    Partnerships (unless its partners include mutual funds, real
    estate investment trusts or REITs, governmental
    entities and agencies, S corporations with ESOP
    shareholders* or other partnerships with such partners)
    Trusts (unless beneficiaries are not subject to tax)  Non-Eligible
    Holders
  not
  
    Mutual Funds
    REITs
    Governmental entities and agencies
    S corporations with ESOP shareholders*     B-4




---



##### Table of Contents



Appendix C  CERTIFICATION
    FORM FOR NON-INDIVIDUAL INVESTORS
    
    If you have an institutional sales account with Citigroup Global
    Markets Inc. and Lehman Brothers Inc., you should fax signed
    forms
    to               by
    5:00 pm Eastern time
    on,          ,
    2007 (the Return Date).
    If you have any other type of brokerage account with any of the
    broker-dealers on page 2, you should fax signed forms to
    your retail broker or financial advisor upon initial indication
    of interest.  Non-individual
    Investors who do not complete and return this form by the
    Return Date will not be allocated units in this
    offering.
  Acknowledgement and Consent to Forward this
    Certification Form. and/or and/or
  Acknowledgement of Obligation to Complete a
    Transfer Application.
  Certification as to Tax
    Status.
  o
  o
  Signing this form shall not obligate the undersigned
    Non-individual Investor to provide or share any tax-related
    information with the Partnership, the transfer agent or any
    underwriter in connection with the purchase and sale of common
    units in the Offering.
      By:    Title:  NON-INDIVIDUAL
    INVESTOR RETAIL BROKER DEALERS
     C-1




---



##### Table of Contents



SCHEDULE I
  Eligible Holders Potentially Eligible
    Holders Non-Eligible Holders.
  Eligible
    Holders
    
    Individuals (U.S. or
    non-U.S.)
    C corporations (U.S. or
    non-U.S.)
    Tax exempt organizations subject to tax on unrelated business
    taxable income or UBTI, including IRAs, 401(k) plans
    and Keough accounts
    S corporations with shareholders that are individuals,
    trusts or tax exempt organizations subject to tax on UBTI  Potentially
    Eligible Holders
    
    Partnerships (unless its partners include mutual funds, real
    estate investment trusts or REITs, governmental
    entities and agencies, S corporations with ESOP
    shareholders1(
    or other partnerships with such partners)
    Trusts (unless beneficiaries are not subject to tax)  Non-Eligible
    Holders
  not
  
    Mutual Funds
    REITs
    Governmental entities and agencies
    S corporations with ESOP
    shareholders3    1
 C-2




---



##### Table of Contents



Appendix D  GLOSSARY
    OF TERMS
  Adjusted Operating Surplus:
          Available Cash:
                provided, however provided, further
  Bcf:
  Bcf/d:
  Btu:
  Capital Account:
 D-1




---



##### Table of Contents



Capital Surplus:
  Closing Price: over-the-counter
  Cumulative Common Unit Arrearage:
  Current Market Price:
  Eligible Holders:
  GAAP:
  Greenfield Construction:
  Interim Capital Transactions:
              Local Distribution Company or LDC:
 D-2




---



##### Table of Contents



Mcf:
  MMBtu:
  MMcf:
  MMBtu/d:
  MMcf/d:
  Operating Expenditures:
                Operating Surplus:
      per-unit
        Peak Day:
 D-3




---



##### Table of Contents



Subordination Period:
              one-for-one
  Throughput:
  Working Gas:
 D-4




---



##### Table of Contents



Spectra Energy Partners,
    LP
  11,500,000 Common
    Units
 Representing Limited Partner
    Interests
  
    PROSPECTUS
  , 2007
   
  Citi
 
  Lehman Brothers
   
  Merrill Lynch &
    Co.
 
 
  UBS Investment Bank
 
 
  Wachovia Securities
 
   
  A.G. Edwards
 
 
  Raymond James




---



##### Table of Contents



PART II
  INFORMATION
    NOT REQUIRED IN THE PROSPECTUS
  Item 13.
    Other
    Expenses of Issuance and Distribution.    SEC registration fee

$
8,526NASD filing fee


28,273New York Stock Exchange listing fee


250,000Printing and engraving expenses


*Accounting fees and expenses


*Legal fees and expenses


*Transfer agent and registrar fees


*Subscription Agent fees


*Information Agent fees


*Standby Commitment fees


*Miscellaneous


*Total

$
6,000,000     *
    
    To be filed by amendment.  Item 14.
    Indemnification
    of Directors and Officers.  Section 17-108
  Item 15.
    Recent
    Sales of Unregistered Securities.    Item 16.
    Exhibits
    and Financial Statement Schedules.    
 ExhibitNumber

Description1
.1*

Form of Underwriting Agreement3
.1**

Certificate of Limited Partnership
    of Spectra Energy Partners, LP3
.2*

Form of First Amended and Restated
    Agreement of Limited Partnership of Spectra Energy Partners, LP
    (included as Appendix A to the Prospectus)3
.3**

Certificate of Limited Partnership
    of Spectra Energy Partners (DE) GP, LP3
.4*

Form of Amended and Restated
    Agreement of Limited Partnership of Spectra Energy Partners (DE)
    GP, LP 
 II-1




---



##### Table of Contents



ExhibitNumber

Description3
.5**

Certificate of Formation of
    Spectra Energy Partners GP, LLC3
.6*

Form of Amended and Restated
    Limited Liability Company Agreement of Spectra Energy Partners
    GP, LLC5
.1*

Opinion of Vinson &
    Elkins L.L.P. as to the legality of the securities being
    registered8
.1*

Opinion of Vinson &
    Elkins L.L.P. relating to tax matters10
.1*

Form of Credit Agreement10
.2*

Form of Contribution, Conveyance
    and Assumption Agreement10
.3*

Form of Omnibus Agreement10
.5*

Form of Long Term Incentive Plan
    of Spectra Energy Partners, LP10
.6*

Second Amended and Restated
    Limited Liability Company Agreement of Gulfstream Natural Gas
    System, L.L.C.10
.7*

Amended and Restated Limited
    Liability Company Agreement of Market Hub Partners Holding, LLC10
.6*

East Tennessee Natural Gas, LLC
    Note Purchase Agreement dated December 15, 2002 relating to
    $150,000,000 of its 5.71% Senior Notes due 201210
.7*

Gulfstream Natural Gas System,
    L.L.C. Indenture dated October 26, 2005 relating to
    $500,000,000 of its 5.56% Senior Notes due 2015 and $350,000,000
    of its 6.19% Senior Notes due 202521
.1*

List of subsidiaries of Spectra
    Energy Partners, LP23
.1

Consent of Deloitte & Touche
    LLP23
.2

Consent of Deloitte & Touche
    LLP23
.3

Consent of Deloitte & Touche
    LLP23
.4*

Consent of Vinson &
    Elkins L.L.P. (contained in Exhibit 5.1)23
.5*

Consent of Vinson &
    Elkins L.L.P. (contained in Exhibit 8.1)24
.1**

Powers of Attorney (included on
    the signature page)  
    *
    
    To be filed by amendment. 
  **
    
    Previously filed. 
   II-2




---



##### Table of Contents



SPECTRA
    ENERGY PARTNERS PREDECESSOR
  SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
  AdditionsBalance at





Charged to





Balance atBeginning of


Charged to


Other


Deductions


End ofPeriod


Expense


Accounts


(a)


Period(In thousands)December 31, 2006:Allowance for doubtful accounts

$
274


$
19


$



$
(52
)

$
241Litigation reserves


















$
274


$
19


$



$
(52
)

$
241December 31, 2005:Allowance for doubtful accounts

$
208


$
170


$



$
(104
)

$
274Litigation reserves


20,000







4,500



(24,500
)


$
20,208


$
170


$
4,500


$
(24,604
)

$
274December 31, 2004:Allowance for doubtful accounts

$
208


$



$



$



$
208Litigation reserves










20,000







20,000$
208


$
1,737


$
20,000


$



$
20,208     (a)
    
    Principally cash payments and reserve reversals  Item 17.
    Undertakings.         II-3




---



##### Table of Contents



Form 10-K
 II-4




---



##### Table of Contents



SIGNATURES
 
   
  SPECTRA ENERGY PARTNERS, LP
  By:
    SPECTRA ENERGY PARTNERS (DE) GP, LP,
    its General Partner  By:
    SPECTRA ENERGY PARTNERS GP, LLC,
    its General Partner  By:
    /s/  C.
    Gregory Harper  
 
   
  
 Signature

Title/s/  C.
    Gregory
    HarperC.
    Gregory Harper

Chief Executive Officer
    (Principal Executive Officer)/s/  Lon
    C.
    Mitchell, Jr.Lon
    C. Mitchell, Jr.

Chief Financial Officer
    (Principal Financial Officer and
    Principal Accounting Officer)*Martha
    B. Wyrsch

Chairman of the Board*By:

/s/  C.
    Gregory
    HarperC.
    Gregory Harper
    Attorney-In-Fact  
 II-5




---



##### Table of Contents



EXHIBIT INDEX
  
 ExhibitNumber

Description1
.1*

Form of Underwriting Agreement3
.1**

Certificate of Limited Partnership
    of Spectra Energy Partners, LP3
.2*

Form of First Amended and Restated
    Agreement of Limited Partnership of Spectra Energy Partners, LP
    (included as Appendix A to the Prospectus)3
.3**

Certificate of Limited Partnership
    of Spectra Energy Partners (DE) GP, LP3
.4*

Form of Amended and Restated
    Agreement of Limited Partnership of Spectra Energy Partners (DE)
    GP, LP3
.5**

Certificate of Formation of
    Spectra Energy Partners GP, LLC3
.6*

Form of Amended and Restated
    Limited Liability Company Agreement of Spectra Energy Partners
    GP, LLC5
.1*

Opinion of Vinson &
    Elkins L.L.P. as to the legality of the securities being
    registered8
.1*

Opinion of Vinson &
    Elkins L.L.P. relating to tax matters10
.1*

Form of Credit Agreement10
.2*

Form of Contribution, Conveyance
    and Assumption Agreement10
.3*

Form of Omnibus Agreement10
.5*

Form of Long Term Incentive Plan
    of Spectra Energy Partners, LP10
.6*

Second Amended and Restated
    Limited Liability Company Agreement of Gulfstream Natural Gas
    System, L.L.C.10
.7*

Amended and Restated Limited
    Liability Company Agreement of Market Hub Partners Holding, LLC10
.6*

East Tennessee Natural Gas, LLC
    Note Purchase Agreement dated December 15, 2002 relating to
    $150,000,000 of its 5.71% Senior Notes due 201210
.7*

Gulfstream Natural Gas System,
    L.L.C. Indenture dated October 26, 2005 relating to
    $500,000,000 of its 5.56% Senior Notes due 2015 and $350,000,000
    of its 6.19% Senior Notes due 202521
.1*

List of subsidiaries of Spectra
    Energy Partners, LP23
.1

Consent of Deloitte & Touche
    LLP23
.2

Consent of Deloitte & Touche
    LLP23
.3

Consent of Deloitte & Touche
    LLP23
.4*

Consent of Vinson &
    Elkins L.L.P. (contained in Exhibit 5.1)23
.5*

Consent of Vinson &
    Elkins L.L.P. (contained in Exhibit 8.1)24
.1**

Powers of Attorney (included on
    the signature page)  
    *
    
    To be filed by amendment. 
  **
    
    Previously filed.