##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE                       SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE                       SECURITIES EXCHANGE ACT OF 1934
 For the transition period from          to                             .
 Commission File Number 1-4874
 Colorado Interstate Gas Company
  Delaware
    
    84-0173305(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)El Paso Building1001 Louisiana StreetHouston, Texas
    
    77002(Address of Principal Executive Offices)
    
    (Zip Code)
 Telephone number: (713) 420-2600
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registered6.85% Senior Debentures, due 2037
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act: None
 o þ
 o þ
 þ o
 þ
  o o þ
 o þ
 State the aggregate market value of the voting stock held by non-affiliates of the registrant:
None
 Indicate the number of shares outstanding of each of the registrants classes of common stock,
as of the latest practicable date.
  COLORADO INTERSTATE GAS COMPANY MEETS THE CONDITIONS OF GENERAL INSTRUCTION I (1) (a) AND (b)
TO FORM 10-K AND IS THEREFORE FILING THIS REPORT WITH A REDUCED DISCLOSURE FORMAT AS PERMITTED BY
SUCH INSTRUCTION.
 Documents Incorporated by Reference: None




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##### 



COLORADO INTERSTATE GAS COMPANY
 TABLE OF CONTENTS
 Caption
    
    PagePART IItem 1.
    
    Business
    
    3Item 1A.
    
    Risk Factors
    
    7Item 1B.
    
    Unresolved Staff Comments
    
    11Item 2.
    
    Properties
    
    11Item 3.
    
    Legal Proceedings
    
    11Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    *PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    12Item 6.
    
    Selected Financial Data
    
    *Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    13Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    17Item 8.
    
    Financial Statements and Supplementary Data
    
    18Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    38Item 9A.
    
    Controls and Procedures
    
    38Item 9B.
    
    Other Information
    
    38PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    *Item 11.
    
    Executive Compensation
    
    *Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    *Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    *Item 14.
    
    Principal Accountant Fees and Services
    
    38PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    39Signatures
    
    40Amendment No.1 to Amended Credit AgreementCertification of PEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of PEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
  
 *
    
    We have not included a response to this item in this document since no response is required
pursuant to the reduced disclosure format permitted by General Instruction I to Form 10-K.  /d
    
    = per day
    
    MDth
    
    = thousand dekathermBBtu
    
    = billion British thermal units
    
    MMcf
    
    = million cubic feetBcf
    
    = billion cubic feet
    
    NGL
    
    = natural gas liquidsLNG
    
    = liquefied natural gas
   2




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PART I
 
 ITEM 1. BUSINESS
 Overview and Strategy
    
    
    Successfully recontracting expiring transportation capacity;
    
    Developing storage capacity to serve our market areas;
    
    Focusing on cost efficiencies, especially fuel use;
    
    Successfully completing expansion projects; and
    
    Attracting new supply and transporting natural gas to new markets.
  The CIG System.
 The Wyoming Interstate Company, Ltd. (WIC) System.
  WYCO.
 Storage and Processing Facilities.
 3




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Markets and Competition
     4




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PipelineSystem
    
    Customer Information
    
    Contract Information
    
    CompetitionCIG
    
    Approximately 110 firm and
interruptible customers
Major Customers:
     PSCo 
          (187 BBtu/d)
          (9 BBtu/d)
          (1,106 BBtu/d)
     Williams Power Company
          (30 BBtu/d)
          (53 BBtu/d)
          (348 BBtu/d)
     Anadarko Petroleum
          Corporation and
          Subsidiaries
          (10 BBtu/d)
          (60 BBtu/d)
          (12 BBtu/d)
          (208 BBtu/d)
    
    Approximately 170 firm
transportation contracts.
Weighted average remaining
contract term of approximately
six years. 
Expires in 2008.
Expires in 2009.
Expire in 2012  2014.
Expires in 2007.
Expires in 2009.
Expire in 2010  2013.
Expires in 2007.
Expires in 2008.
Expires in 2009. 
Expire in 2010  2015.
    
    Competition for its on-system
market consists of an
intrastate pipeline, a new
interstate pipeline, local
production from the
Denver-Julesburg basin, and
long-haul shippers who elect
to sell into this market
rather than the off-system
market. Competition for its
off-system market consists of
a new interstate pipeline and
other existing interstate
pipelines that are directly
connected to its supply
sources.WIC
    
    Approximately 50 firm and
   interruptible customers
Major Customers:
     Williams Power Company
          (25 BBtu/d)
          (678 BBtu/d)
     Anadarko Petroleum
          Corporation and
          Subsidiaries 
          (25 BBtu/d)
          (385 BBtu/d)
    
    Approximately 50 firm
transportation contracts.
Weighted average remaining
contract term of approximately
six years.

Expires in 2008. 
Expire in 2010  2021.

Expires in 2008.
Expire in 2011  2017.
    
    WIC competes with existing
pipelines and a new interstate
pipeline to provide
transportation services to
pipeline interconnects in
northeast Colorado and western
Wyoming.
 5




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Regulatory Environment
  
    
    rates and charges for natural gas transportation and storage;
    
    certification and construction of new facilities;
    
    extension or abandonment of services and facilities;
    
    maintenance of accounts and records;
    
    relationships between pipelines and certain affiliates;
    
    terms and conditions of services;
    
    depreciation and amortization policies;
    
    acquisition and disposition of facilities; and
    
    initiation and discontinuation of services.
   Environmental
  Employees
  6




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ITEM 1A. RISK FACTORS
 CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
   Risks Related to Our Business
 Our success depends on factors beyond our control.
  
    
    service area competition;
    
    expiration or turn back of significant contracts;
    
    changes in regulation and actions of regulatory bodies;
    
    weather conditions that impact throughput and storage levels;
    
    price competition;
    
    drilling activity and availability of natural gas;
    
    continued development of additional sources of gas supply that can be accessed;
    
    decreased natural gas demand due to various factors, including increases in prices and
the increased availability or popularity of alternative energy sources such as
hydroelectric, wind, coal and fuel oil;
    
    availability and increased cost of capital to fund ongoing maintenance and growth projects;
    
    opposition to energy infrastructure development, especially in environmentally sensitive areas;
    
    adverse general economic conditions; and
    
    unfavorable movements in natural gas and NGL prices in supply and demand areas.
 7




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The revenues of our pipeline businesses are generated under contracts that must be renegotiated
periodically, some of which are for a substantial portion of our firm transportation capacity.
   Fluctuations in energy commodity prices could adversely affect our business.
  
    
    regional, domestic and international supply and demand;
    
    availability and adequacy of transportation facilities;
    
    energy legislation;
    
    federal and state taxes, if any, on the transportation and storage of natural gas and NGL;
    
    abundance of supplies of alternative energy sources; and
    
    political unrest among oil producing countries.
 The agencies that regulate us and our customers affect our profitability.
    8




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Environmental compliance and remediation costs and the costs of environmental liabilities could
exceed our estimates.
  
    
    The uncertainties in estimating pollution control and clean up costs, including sites
where preliminary site investigation or assessments have been completed;
    
    The discovery of new sites or additional information at existing sites;
    
    The uncertainty in quantifying liability under environmental laws that impose joint and
several liability on all potentially responsible parties; and
    
    The nature of environmental laws and regulations, including the interpretation and
enforcement thereof.
   Our operations are subject to operational hazards and uninsured risks.
   The expansion of our business by constructing new facilities subjects us to construction and other
risks that may adversely affect our financial results.
  
    
    our ability to obtain necessary approvals and permits by regulatory agencies on a timely
basis and on terms that are acceptable to us;
    
    the ability to obtain continued access to sufficient capital to fund expansion projects;
    
    potential changes in federal, state and local statutes and regulations, including
environmental requirements, that prevent a project from proceeding or increase the
anticipated cost of the project;
    
    impediments on our ability to acquire rights-of-way or land rights on a timely basis on
terms that are acceptable to us;
 9




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
    
    our ability to construct projects within anticipated costs, including the risk that we may
incur cost overruns resulting from
inflation or increased costs of equipment, materials or labor, or other factors beyond our
control, that may be material;
    
    lack of anticipated future growth in natural gas supply; and
    
    lack of transportation, storage or throughput commitments.
  Our business requires the retention and recruitment of a skilled workforce and the loss of
employees could result in the failure to implement our business plan.
  Risks Related to Our Affiliation with El Paso
  Our relationship with El Paso and its financial condition subjects us to potential risks that are
beyond our control.
   We may be subject to a change of control if an event of default occurs under El Pasos credit
agreement.
  A default under El Pasos $1.75 billion credit agreement by any party could accelerate our future
borrowings, if any, under the agreement and our long-term debt, which could adversely affect our
liquidity position.
  10




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We are an indirect wholly owned subsidiary of El Paso.
  
    
    our payment of dividends;
    
    decisions on our financing and capital raising activities;
    
    mergers or other business combinations;
    
    our acquisitions or dispositions of assets; and
    
    our participation in El Pasos cash management program.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
   
 ITEM 3. LEGAL PROCEEDINGS
  Natural Buttes.
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  11




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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS
COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
   
 ITEM 6. SELECTED FINANCIAL DATA
  12




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   Overview
  Percent of TotalType
    
    Description
    
    Revenues in 2006Reservation
    
    Reservation revenues are
from customers (referred to
as firm customers) that
reserve capacity on our
pipeline systems and
storage facilities. These
firm customers are
obligated to pay a monthly
reservation or demand
charge, regardless of the
amount of natural gas they
transport or store, for the
term of their contracts.
    
    
    82Usage and Other
    
    Usage revenues are from
both firm customers and
interruptible customers
(those without reserved
capacity) who pay charges based on the volume
of gas actually
transported, injected or
withdrawn. We also earn
revenue from the processing
and sale of natural gas
liquids and other
miscellaneous sources.
    
    
    18
    13




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Percent of Total
    
    
    Reservation
    
    
    Percent of TotalBBtu/d(1)
    
    
    Contracted Capacity
    
    
    Revenue
    
    
    Reservation Revenue(In millions)2007
    
    
    184
    
    
    
    3
    
    
    $
    7
    
    
    
    22008
    
    
    692
    
    
    
    12
    
    
    
    28
    
    
    
    82009
    
    
    390
    
    
    
    7
    
    
    
    18
    
    
    
    62010
    
    
    282
    
    
    
    5
    
    
    
    17
    
    
    
    52011
    
    
    366
    
    
    
    6
    
    
    
    18
    
    
    
    62012 and beyond
    
    
    3,803
    
    
    
    67
    
    
    
    239
    
    
    
    73Total
    
    
    5,717
    
    
    
    100
    
    
    $
    327
    
    
    
    100
 
 (1)
    
    Excludes CIG capacity on the WIC system. Results of Operations
  2006
    
    
    2005(In millions, except volumes)Operating revenues
    
    $
    394
    
    
    $
    374Operating expenses
    
    
    (183
    )
    
    
    (227
    )Operating income
    
    
    211
    
    
    
    147Other income, net
    
    
    5
    
    
    
    8EBIT
    
    
    216
    
    
    
    155Interest and debt expense
    
    
    (46
    )
    
    
    (30
    )Affiliated interest income, net
    
    
    44
    
    
    
    27Income taxes
    
    
    (79
    )
    
    
    (55
    )Net income
    
    $
    135
    
    
    $
    97Throughput volumes (BBtu/d)(1)
    
    
    3,718
    
    
    
    3,300
 
 (1)
    
    Throughput volumes include billable transportation throughput volume for storage
activities and exclude throughput transported by WIC on behalf of CIG.  EBITRevenue
    
    
    Expense
    
    
    Other
    
    
    ImpactFavorable/(Unfavorable)(In millions)Higher transportation revenues
    
    $
    32
    
    
    $
    
    
    
    $
    
    
    
    $
    32Operational gas, revaluations and processing revenues
    
    
    (5
    )
    
    
    33
    
    
    
    
    
    
    
    28Environmental reserve
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    11Other(1)
    
    
    (7
    )
    
    
    
    
    
    
    (3
    )
    
    
    (10
    )Total impact on EBIT
    
    $
    20
    
    
    $
    44
    
    
    $
    (3
    )
    
    $
    61
 
 (1)
    
    Consists of individually insignificant items. 14




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Higher Transportation Revenues.
 Operational Gas, Revaluations and Processing Revenues.
 Environmental Reserve.
 Regulatory Matter.
 Interest and Debt Expense
  Affiliated Interest Income, Net
  Income Taxes
 Year EndedDecember 31,2006
    
    
    2005(In millions, except for rates)Income taxes
    
    $
    79
    
    
    $
    55Effective tax rate
    
    
    37
    %
    
    
    36
    %
  15




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Liquidity and Capital Resources
 Liquidity Overview
   Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities
   Debt
  Capital Expenditures
  2006
    
    
    2005(In millions)Maintenance
    
    $
    55
    
    
    $
    29Expansion/Other
    
    
    74
    
    
    
    119Total
    
    $
    129
    
    
    $
    148
  16




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Commitments and Contingencies
  New Accounting Pronouncements Issued But Not Yet Adopted
 New Accounting
Pronouncements Issued But Not Yet Adopted
 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  December 31, 2006Expected Fiscal Year of Maturity of Carrying Amounts
    
    December 31, 2005Fair
    
    Carrying
    
    Fair2007
    
    Thereafter
    
    Total
    
    Value
    
    Amount
    
    Value(In millions, except for rates)Liabilities:Long-term financial obligations,
including current maturities 
fixed rate
    
    $
    101
    
    
    $
    608
    
    
    $
    709
    
    
    $
    724
    
    
    $
    709
    
    
    $
    719Average effective interest rate
    
    
    6.9
    %
    
    
    6.4
    %
  17




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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
 Report of Independent Registered Public Accounting Firm
     Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans  An Amendment of FASB Statements No. 87, 88, 106, and 132(R).
  
 18




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Report of Independent Registered Public Accounting Firm
 
   
 19




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COLORADO INTERSTATE GAS COMPANY
 
 CONSOLIDATED STATEMENTS OF INCOME
(In millions)
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Operating revenues
    
    $
    394
    
    
    $
    374
    
    
    $
    348Operating expensesOperation and maintenance
    
    
    125
    
    
    
    169
    
    
    
    130Depreciation, depletion and amortization
    
    
    44
    
    
    
    43
    
    
    
    41Taxes, other than income taxes
    
    
    14
    
    
    
    15
    
    
    
    14183
    
    
    
    227
    
    
    
    185Operating income
    
    
    211
    
    
    
    147
    
    
    
    163Other income, net
    
    
    5
    
    
    
    8
    
    
    
    3Interest and debt expense
    
    
    (46
    )
    
    
    (30
    )
    
    
    (26
    )Affiliated interest income, net
    
    
    44
    
    
    
    27
    
    
    
    13Income before income taxes
    
    
    214
    
    
    
    152
    
    
    
    153Income taxes
    
    
    79
    
    
    
    55
    
    
    
    54Net income
    
    $
    135
    
    
    $
    97
    
    
    $
    99
  20




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COLORADO INTERSTATE GAS COMPANY
 
 CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts)
 December 31,2006
    
    
    2005ASSETSCurrent assetsCash and cash equivalents
    
    $
    
    
    
    $
    Accounts and notes receivableCustomer, net of allowance of $1 in 2006 and $3 in 2005
    
    
    14
    
    
    
    45Affiliates
    
    
    247
    
    
    
    4Other
    
    
    1
    
    
    
    1Materials and supplies
    
    
    6
    
    
    
    3Deferred income taxes
    
    
    6
    
    
    
    7Prepaids and other
    
    
    15
    
    
    
    22Total current assets
    
    
    289
    
    
    
    82Property, plant and equipment, at cost
    
    
    1,899
    
    
    
    1,792Less accumulated depreciation, depletion and amortization
    
    
    552
    
    
    
    547Total property, plant and equipment, net
    
    
    1,347
    
    
    
    1,245Other assetsNotes receivable from affiliates
    
    
    599
    
    
    
    757Other
    
    
    55
    
    
    
    34654
    
    
    
    791Total assets
    
    $
    2,290
    
    
    $
    2,118LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payableTrade
    
    $
    17
    
    
    $
    19Affiliates
    
    
    11
    
    
    
    19Other
    
    
    12
    
    
    
    22Current maturities of long-term financing obligations
    
    
    101
    
    
    
    Taxes payable
    
    
    81
    
    
    
    59Accrued liabilities
    
    
    4
    
    
    
    10Accrued interest
    
    
    7
    
    
    
    8Other
    
    
    19
    
    
    
    17Total current liabilities
    
    
    252
    
    
    
    154Long-term financing obligations, less current maturities
    
    
    608
    
    
    
    709Other liabilitiesDeferred income taxes
    
    
    242
    
    
    
    221Other
    
    
    39
    
    
    
    25281
    
    
    
    246Commitments and contingenciesStockholders equityCommon stock, par value $1 per share; 1,000 shares authorized, issued and outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    47
    
    
    
    47Retained earnings
    
    
    1,097
    
    
    
    962Accumulated other comprehensive income
    
    
    5
    
    
    
    Total stockholders equity
    
    
    1,149
    
    
    
    1,009Total liabilities and stockholders equity
    
    $
    2,290
    
    
    $
    2,118
  21




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COLORADO INTERSTATE GAS COMPANY
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Cash flows from operating activitiesNet income
    
    $
    135
    
    
    $
    97
    
    
    $
    99Adjustments to reconcile net income to net cash from operating activitiesDepreciation, depletion and amortization
    
    
    44
    
    
    
    43
    
    
    
    41Deferred income taxes
    
    
    15
    
    
    
    4
    
    
    
    15Other non-cash income items
    
    
    10
    
    
    
    (5
    )
    
    
    2Asset and liability changesAccounts receivable
    
    
    42
    
    
    
    35
    
    
    
    (9
    )Accounts payable
    
    
    (13
    )
    
    
    17
    
    
    
    19Taxes payable
    
    
    17
    
    
    
    
    
    
    
    (24
    )Other, net
    
    
    (19
    )
    
    
    8
    
    
    
    (9
    )Net cash provided by operating activities
    
    
    231
    
    
    
    199
    
    
    
    134Cash flows from investing activitiesAdditions to property, plant and equipment
    
    
    (129
    )
    
    
    (148
    )
    
    
    (61
    )Net change in notes receivable from affiliates
    
    
    (66
    )
    
    
    (216
    )
    
    
    (63
    )Cash paid for acquisitions of affiliates
    
    
    (37
    )
    
    
    
    
    
    
    Other
    
    
    1
    
    
    
    
    
    
    
    (2
    )Net cash used in investing activities
    
    
    (231
    )
    
    
    (364
    )
    
    
    (126
    )Cash flows from financing activitiesNet proceeds from issuance of long-term debt
    
    
    
    
    
    
    590
    
    
    
    Payments to retire long-term debt
    
    
    
    
    
    
    (210
    )
    
    
    (11
    )Distribution
    
    
    
    
    
    
    (215
    )
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    (1
    )Net cash provided by (used in) financing activities
    
    
    
    
    
    
    165
    
    
    
    (12
    )Net change in cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    (4
    )Cash and cash equivalentsBeginning of period
    
    
    
    
    
    
    
    
    
    
    4End of period
    
    $
    
    
    
    $
    
    
    
    $
    
  22




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COLORADO INTERSTATE GAS COMPANY
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(In millions, except share amounts)
 AccumulatedAdditional
    
    
    
    
    
    
    other
    
    
    TotalCommon stock
    
    
    paid-in
    
    
    Retained
    
    
    comprehensive
    
    
    stockholdersShares
    
    
    Amount
    
    
    capital
    
    
    earnings
    
    
    income
    
    
    equityJanuary 1, 2004
    
    
    1,000
    
    
    $
    
    
    
    $
    108
    
    
    $
    920
    
    
    $
    
    
    
    $
    1,028Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99
    
    
    
    
    
    
    
    99December 31, 2004
    
    
    1,000
    
    
    
    
    
    
    
    108
    
    
    
    1,019
    
    
    
    
    
    
    
    1,127Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    97
    
    
    
    
    
    
    
    97Distribution
    
    
    
    
    
    
    
    
    
    
    (61
    )
    
    
    (154
    )
    
    
    
    
    
    
    (215
    )December 31, 2005
    
    
    1,000
    
    
    
    
    
    
    
    47
    
    
    
    962
    
    
    
    
    
    
    
    1,009Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    135
    
    
    
    
    
    
    
    135Adoption of
SFAS No. 158, net of income taxes of $3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    5December 31, 2006
    
    
    1,000
    
    
    $
    
    
    
    $
    47
    
    
    $
    1,097
    
    
    $
    5
    
    
    $
    1,149
  23




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##### Table of Contents



COLORADO INTERSTATE GAS COMPANY
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Summary of Significant Accounting Policies
 Basis of Presentation and Principles of Consolidation
    Use of Estimates
  Regulated Operations
 Accounting for the
Effects of Certain Types of Regulation
 Cash and Cash Equivalents
  Allowance for Doubtful Accounts
  Materials and Supplies
  24




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##### Table of Contents



Natural Gas Imbalances
   Property, Plant and Equipment
      Asset and Investment Impairments
  25




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##### Table of Contents



Revenue Recognition
  Environmental Costs and Other Contingencies
 Environmental Costs.
  Other Contingencies
 Income Taxes
   Accounting for Asset Retirement Obligations
 Accounting
for Asset Retirement Obligations , Accounting for Conditional Asset Retirement Obligations.
 26




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##### Table of Contents



Pension and Other Postretirement Benefits
 Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans  An Amendment of FASB Statements No. 87, 88, 106,
and 132(R).
 Evaluation of Prior Period Misstatements in Current Financial Statements
 Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year
Financial Statements.
 New Accounting Pronouncements Issued But Not Yet Adopted
  Accounting for Uncertainty in Income Taxes. Accounting for Uncertainty in Income Taxes. Accounting for
Income Taxes,
 Fair Value Measurements. Fair Value
Measurements
 Measurement Date of Other Postretirement Benefits
 27




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##### Table of Contents



2. Acquisitions
   3. Income Taxes
 Components of Income Taxes.
 2006
    
    
    2005
    
    
    2004(In millions)CurrentFederal
    
    $
    59
    
    
    $
    49
    
    
    $
    41State
    
    
    5
    
    
    
    2
    
    
    
    (2
    )64
    
    
    
    51
    
    
    
    39DeferredFederal
    
    
    14
    
    
    
    3
    
    
    
    13State
    
    
    1
    
    
    
    1
    
    
    
    215
    
    
    
    4
    
    
    
    15Total income taxes
    
    $
    79
    
    
    $
    55
    
    
    $
    54
 Effective Tax Rate Reconciliation.
 2006
    
    
    2005
    
    
    2004(In millions, except for rates)Income taxes at the statutory federal rate of 35%
    
    $
    75
    
    
    $
    53
    
    
    $
    54Increase (decrease)State income taxes, net of federal income tax benefit
    
    
    4
    
    
    
    3
    
    
    
    3State income tax adjustment, net of federal income tax benefit
    
    
    
    
    
    
    (1
    )
    
    
    (3
    )Income taxes
    
    $
    79
    
    
    $
    55
    
    
    $
    54Effective tax rate
    
    
    37
    %
    
    
    36
    %
    
    
    35
    %
 Deferred Tax Assets and Liabilities.
 2006
    
    
    2005(In millions)Deferred tax liabilitiesProperty, plant and equipment
    
    $
    234
    
    
    $
    220Other
    
    
    20
    
    
    
    18Total deferred tax liability
    
    
    254
    
    
    
    238Deferred tax assetsOther
    
    
    18
    
    
    
    24Total deferred tax asset
    
    
    18
    
    
    
    24Net deferred tax liability
    
    $
    236
    
    
    $
    214
 28




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##### Table of Contents



4. Financial Instruments
  2006
    
    2005Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    Value(In millions)Balance sheet financial instruments:Long-term financing obligations, including current maturities(1)
    
    $
    709
    
    
    $
    724
    
    
    $
    709
    
    
    $
    719
 
 (1)
    
    We estimated the fair value of our debt with fixed interest rates based on
quoted market prices for the same or similar issues.  5. Regulatory Assets and Liabilities
  Description
    
    2006
    
    
    2005(In millions)Current regulatory asset
    
    $
    6
    
    
    $
    2Non-current regulatory assetsGross-up of deferred taxes on capitalized funds used during construction
    
    
    16
    
    
    
    14Postretirement benefits
    
    
    4
    
    
    
    5Under-collected deferred income taxes
    
    
    2
    
    
    
    2Total regulatory assets(1)
    
    $
    28
    
    
    $
    23Current regulatory liabilities
    
    $
    10
    
    
    $
    7Non-current regulatory liabilitiesProperty and plant depreciation
    
    
    23
    
    
    
    Excess deferred income taxes
    
    
    2
    
    
    
    2Deferred fuel variance
    
    
    
    
    
    
    8Total regulatory liabilities(1)
    
    $
    35
    
    
    $
    17
 
 (1)
    
    Amounts are included as other current and non-current assets and other current
and non-current liabilities on our balance sheets. 6. Long-Term Financing Obligations and Credit Facilities
 Long-Term Financing Obligations
  2006
    
    
    2005(In millions)5.95% Senior Notes due March 2015
    
    $
    200
    
    
    $
    2006.80% Senior Notes due November 2015
    
    
    400
    
    
    
    4006.85% Senior Debentures due June 2037
    
    
    100
    
    
    
    100700
    
    
    
    700Capital lease
    
    
    9
    
    
    
    9709
    
    
    
    709Less: Current maturities
    
    
    101
    
    
    
    Total long-term financing obligations, less current maturities
    
    $
    608
    
    
    $
    709
    29




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##### Table of Contents



Credit Facilities
   7. Commitments and Contingencies
 Legal Proceedings
 Gas Measurement Cases. re: Natural Gas Royalties
Qui Tam Litigation,
 Will Price, et
al. v. Gas Pipelines and Their Predecessors, et al.,
   30




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##### Table of Contents



Environmental Matters
   Balance at January 1, 2006
    
    $
    23Additions/adjustments for remediation activities
    
    
    2Payments for remediation activities
    
    
    (8
    )Balance at December 31, 2006
    
    $
    17
   Rates and Regulatory Matter
 Rate Case.
 Capital and Investment Commitments
  Operating Leases
  Year EndingDecember 31,
    
    (In millions)2007
    
    $
    22008
    
    
    22009
    
    
    2Total
    
    $
    6
  31




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##### Table of Contents



Other Commercial Commitments
  Capital Lease
   Year EndingDecember 31,
    
    (In millions)2007
    
    $
    12008
    
    
    12009
    
    
    12010
    
    
    12011
    
    
    1Thereafter
    
    
    12Total minimum lease payments
    
    
    17Less: amount representing interest
    
    
    8Present value of net minimum lease payments
    
    $
    9
 8. Retirement Benefits
 Pension and Retirement Benefits.
 Postretirement Benefits.
  32




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##### Table of Contents



Change in Accumulated Postretirement Benefit Obligation, Plan Assets and Funded Status
 2006
    
    
    2005(In millions)Change in accumulated postretirement benefit obligation:Accumulated postretirement benefit obligation at beginning of period:
    
    $
    11
    
    
    $
    12Participant contributions
    
    
    1
    
    
    
    1Actuarial gain
    
    
    (2
    )
    
    
    Benefits paid
    
    
    (2
    )
    
    
    (2
    )Other
    
    
    3
    
    
    
    Accumulated postretirement benefit obligation at end of period
    
    $
    11
    
    
    $
    11Change in plan assets:Fair value of plan assets at beginning of period
    
    $
    16
    
    
    $
    14Actual return on plan assets
    
    
    1
    
    
    
    1Employer contributions
    
    
    1
    
    
    
    2Participant contributions
    
    
    1
    
    
    
    1Benefits paid
    
    
    (2
    )
    
    
    (2
    )Fair value of plan assets at end of period
    
    $
    17
    
    
    $
    16Reconciliation of funded status:Fair value of plan assets at September 30
    
    $
    17
    
    
    $
    16Less: accumulated postretirement benefit obligation, end of period
    
    
    11
    
    
    
    11Funded status at September 30
    
    
    6
    
    
    
    5Unrecognized actuarial gain (1)
    
    
    
    
    
    
    (6
    )Net asset (liability) at December 31
    
    $
    6
    
    
    $
    (1
    )
 
 (1)
    
    Amounts were reclassified to accumulated other comprehensive income upon adoption
of SFAS No. 158 in 2006. Expected Payment of Future Benefits.
 Year EndingDecember 31,2007
    
    $
    12008
    
    
    12009
    
    
    12010
    
    
    12011
    
    
    12012 - 2016
    
    
    5Total
    
    $
    10
 Components of Net Benefit Cost.
 2006
    
    
    2005
    
    
    2004(In millions)Interest cost
    
    $
    
    
    
    $
    
    
    
    $
    1Expected return on plan assets
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Other
    
    
    3
    
    
    
    
    
    
    
    Net postretirement benefit cost
    
    $
    2
    
    
    $
    
    
    
    $
    
 33




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##### Table of Contents



Actuarial Assumptions and Sensitivity Analysis
 2006
    
    2005
    
    2004(Percent)Assumptions related to benefit obligations at September 30:Discount rate
    
    
    5.50
    
    
    
    5.25Assumptions related to benefit costs at December 31:Discount rate
    
    
    5.25
    
    
    
    5.75
    
    
    
    6.00Expected return on plan assets(1)
    
    
    8.00
    
    
    
    7.50
    
    
    
    7.50
 
 (1)
    
    The expected return on plan assets is a pre-tax rate (before a tax rate of 35
percent on postretirement benefits) that is primarily based on an expected risk-free
investment return, adjusted for historical risk premiums and specific risk adjustments
associated with our debt and equity securities. These expected returns were then
weighted based on the target asset allocations of our investment portfolio.  Plan Assets.
 Actual
    
    ActualAsset Category
    
    2006
    
    2005(Percent)Equity securities
    
    
    61
    
    
    
    59Debt securities
    
    
    33
    
    
    
    31Other
    
    
    6
    
    
    
    10Total
    
    
    100
    
    
    
    100
   9. Transactions with Major Customer
  2006
    
    2005
    
    2004(In millions)PSCo
    
    $
    98
    
    
    $
    98
    
    
    $
    99
 10. Supplemental Cash Flow Information
  2006
    
    2005
    
    2004(In millions)Interest paid, net of capitalized interest
    
    $
    48
    
    
    $
    26
    
    
    $
    28Income tax payments
    
    
    47
    
    
    
    51
    
    
    
    64
 34




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##### Table of Contents



11. Investment in Unconsolidated Affiliate and Transactions with Affiliates
 Investment in Unconsolidated Affiliate
  Transactions with Affiliates
 Cash Management Program.
 Accounts Receivable Sales Program. Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities
 Taxes.
 Other Affiliate Balances.
 2006
    
    2005(In millions)Non-current note receivable
    
    $
    7
    
    
    $
    7Contractual deposits
    
    
    6
    
    
    
    5
 Affiliate Revenues and Expenses.
   2006
    
    2005
    
    2004(In millions)Revenues from affiliates
    
    $
    22
    
    
    $
    28
    
    
    $
    37Operation and maintenance expenses from affiliates
    
    
    44
    
    
    
    48
    
    
    
    44Reimbursements of operating expenses charged to affiliates
    
    
    7
    
    
    
    6
    
    
    
    
 35




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##### Table of Contents



12. Supplemental Selected Quarterly Financial Information (Unaudited)
  Quarters EndedMarch 31
    
    June 30
    
    September 30
    
    December 31
    
    Total(In millions)2006Operating revenues
    
    $
    101
    
    
    $
    96
    
    
    $
    91
    
    
    $
    106
    
    
    $
    394Operating income
    
    
    64
    
    
    
    50
    
    
    
    39
    
    
    
    58
    
    
    
    211Net income
    
    
    41
    
    
    
    33
    
    
    
    25
    
    
    
    36
    
    
    
    1352005Operating revenues
    
    $
    95
    
    
    $
    86
    
    
    $
    85
    
    
    $
    108
    
    
    $
    374Operating income
    
    
    45
    
    
    
    36
    
    
    
    17
    
    
    
    49
    
    
    
    147Net income
    
    
    27
    
    
    
    23
    
    
    
    14
    
    
    
    33
    
    
    
    97
 36




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##### Table of Contents



SCHEDULE II
 COLORADO INTERSTATE GAS COMPANY
 VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2006, 2005 and 2004
(In millions)
 Balance at
    
    
    Charged to
    
    
    
    
    
    
    Charged to
    
    
    BalanceBeginning
    
    
    Costs and
    
    
    
    
    
    
    Other
    
    
    at EndDescription
    
    of Period
    
    
    Expenses
    
    
    Deductions(1)
    
    
    Accounts
    
    
    of Period2006Allowance for doubtful accounts
    
    $
    3
    
    
    $
    (1
    )
    
    $
    
    
    
    $
    (1
    )
    
    $
    1Environmental reserves
    
    
    23
    
    
    
    2
    
    
    
    (8
    )
    
    
    
    
    
    
    172005Environmental reserves
    
    $
    14
    
    
    $
    13
    
    
    $
    (4
    )
    
    $
    
    
    
    $
    23Allowance for doubtful accounts
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    32004Environmental reserves
    
    $
    14
    
    
    $
    3
    
    
    $
    (3
    )
    
    $
    
    
    
    $
    14Allowance for doubtful accounts
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
 
 (1)
    
    These amounts represent cash payments. 37




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  
 ITEM 9B. OTHER INFORMATION
  
 PART III
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
 Audit Fees
  All Other Fees
  38




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##### Table of Contents



Policy for Approval of Audit and Non-Audit Fees
  
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a) The following documents are filed as part of this report:
   PageReports of Independent Registered Public Accounting Firms
    
    
    18Consolidated Statements of Income
    
    
    20Consolidated Balance Sheets
    
    
    21Consolidated Statements of Cash Flows
    
    
    22Consolidated Statements of Stockholders Equity
    
    
    23Notes to Consolidated Financial Statements
    
    
    242. Financial statement schedules.Schedule II  Valuation and Qualifying Accounts
 All other schedules are omitted because they are not applicable, or the required information is disclosed in the financial
statements or accompanying notes.3. Exhibits
  Undertaking
  39




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##### Table of Contents



SIGNATURES
 th
 COLORADO INTERSTATE GAS COMPANYBy:
    
    /S/ JAMES J. CLEARYJames J. ClearyPresident
  Signature
    
    Title
    
    Date/S/ JAMES J. CLEARY
James J. Cleary
    
    President and Director
(Principal Executive Officer)
    
    February 28, 2007/S/ JOHN R. SULT
John R. Sult
    
    Senior Vice President,
Chief Financial Officer and Controller
(Principal Accounting and Financial Officer)
    
    February 28, 2007/S/ JAMES C. YARDLEY
James C. Yardley
    
    Chairman of the Board
    
    February 28, 2007/S/ DANIEL B. MARTIN
Daniel B. Martin
    
    Senior Vice President and Director
    
    February 28, 2007/S/ THOMAS L. PRICE
    
    Vice President and Director
    
    February 28, 2007Thomas L. Price
 40




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##### Table of Contents



COLORADO INTERSTATE GAS COMPANY
 
 EXHIBIT INDEX
 December 31, 2006
  ExhibitNumber
    
    Description3.A
    
    Amended and Restated Certificate of Incorporation dated as of March 7, 2002 (Exhibit 3.A to our 2001 Form 10-K).3.B
    
    By-laws dated June 24, 2002. (Exhibit 3.B to our 2002 Form 10-K)4.A
    
    Indenture dated as of June 27, 1997, between Colorado Interstate Gas Company and The Bank of New York Trust
Company, N.A. (successor to Harris Trust and Savings Bank), as Trustee (Exhibit 4.A to our 2004 Form 10-K).4.A.1
    
    First Supplemental Indenture dated as of June 27, 1997, between Colorado Interstate Gas Company and The Bank of
New York Trust Company, N.A. (successor to Harris Trust and Savings Bank), as Trustee (Exhibit 4.A.1 to our
2004 Form 10-K).4.A.2
    
    Second Supplemental Indenture dated as of March 9, 2005 between Colorado Interstate Gas Company and The Bank of
New York Trust Company, N.A., as Trustee (Exhibit 4.A to our Form 8-K filed March 14, 2005).4.A.3
    
    Third Supplemental Indenture dated as of November 1, 2005 between Colorado Interstate Gas Company and The Bank
of New York Trust Company, N.A., as trustee (Exhibit 4.A to our Form 8-K filed on November 2, 2005).10.A
    
    No-Notice Storage and Transportation Delivery Service Agreement Rate Schedule NNT-1, dated October 1, 2001,
between Colorado Interstate Gas Company and Public Service Company of Colorado (Exhibit 10.G to our 2005 First
Quarter Form 10-Q).10.B
    
    Registration Rights Agreement, dated as of November 1, 2005, among Colorado Interstate Gas Company and
Citigroup Global Markets Inc., Credit Suisse First Boston LLC, ABN AMRO Incorporated, BNP Paribas, Greenwich
Capital Markets, Inc., HVB Capital Markets, Inc., and SG Americas Securities, LLC (Exhibit 10.A to our Form 8-K
filed on November 2, 2005).10.C
    
    Purchase and Sale Agreement, By and Among CIG Gas Supply Company, Wyoming Gas Supply Inc., WIC Holdings Inc.,
El Paso Wyoming Gas Supply Company and Wyoming Interstate Company, Ltd., dated November 1, 2005 (Exhibit 10.B
to our Form 8-K filed on November 2, 2005).10.D
    
    Amended and Restated Credit Agreement dated as of July 31, 2006, among El Paso Corporation, Colorado Interstate
Gas Company, El Paso Natural Gas Company, Tennessee Gas Pipeline Company, the several banks and other financial
institutions from time to time parties thereto and JPMorgan Chase Bank, N.A., as administrative agent and as
collateral agent (Exhibit 10.A to our Form 8-K filed with the SEC on August 2, 2006).*10.D.1
    
    Amendment No.1 dated as of January 19, 2007 to the Amended and Restated Credit Agreement dated as of July 31,
2006 among El Paso Corporation, Colorado Interstate Gas Company, El Paso Natural Gas Company, Tennessee Gas
Pipeline Company, the several banks and other financial institutions from time to time parties thereto, and
JPMorgan Chase Bank, N.A., as administrative agent and as collateral agent.10.E
    
    Amended and Restated Security Agreement dated as of July 31, 2006, among El Paso Corporation, Colorado
Interstate Gas Company, El Paso Natural Gas Company, Tennessee Gas Pipeline Company, the Subsidiary Guarantors
and certain other credit parties thereto and JPMorgan Chase Bank, N.A., not in its individual capacity, but
solely as collateral agent for the Secured Parties and as the depository bank (Exhibit 10.B to our Form 8-K
filed with the SEC on August 2, 2006).10.F
    
    First Tier Receivables Sale Agreement dated November 3, 2006 between Colorado Interstate Gas Company and CIG
Finance Company L.L.C. (Exhibit 10.A to our Form 8-K filed with the SEC on November 9, 2006).10.G
    
    Second Tier Receivables Sale Agreement dated November 3, 2006 between CIG Finance Company L.L.C. and CIG
Funding Company L.L.C. (Exhibit 10.B to our Form 8-K filed with the SEC on November 9, 2006).
 41




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##### Table of Contents



ExhibitNumber
    
    Description10.H
    
    Receivables Purchase Agreement dated November 3, 2006 among CIG Funding Company L.L.C., as Seller, Colorado
Interstate Gas Company, as Servicer, Starbird Funding Corporation, as the initial Conduit Investor and
Committed Investor, the other investors from time to time parties thereto, BNP Paribas, New York Branch, as the
initial Managing Agent, the other Managing Agents from time to time parties thereto, and BNP Paribas, New York
Branch, as Program Agent (Exhibit 10.C to our Form 8-K filed with the SEC on November 9, 2006).21
    
    Omitted pursuant to the reduced disclosure format permitted by General Instruction I to Form 10-K.*31.A
    
    Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*31.B
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.A
    
    Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*32.B
    
    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 42