TENNESSEE GAS PIPELINE CO, 10-K405, 2000-03-13

TENNESSEE GAS PIPELINE CO
10-K405, 2000-03-13
NATURAL GAS TRANSMISSION

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

---------------------

FORM 10-K
(MARK ONE)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

[ ] 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 1-4101

TENNESSEE GAS PIPELINE COMPANY
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 74-1056569
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

EL PASO ENERGY BUILDING
1001 LOUISIANA STREET
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
</TABLE>

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 420-2131

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

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.

Common Stock, par value $5 per share. Shares outstanding on March 10,
2000: 208

TENNESSEE GAS PIPELINE 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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<PAGE> 2

TENNESSEE GAS PIPELINE COMPANY

TABLE OF CONTENTS

<TABLE>
<CAPTION>
CAPTION PAGE
------- ----
<S> <C> <C>
Glossary.............................................................. ii

PART I
Item 1. Business.................................................... 1
Item 2. Properties.................................................. 3
Item 3. Legal Proceedings........................................... 3
Item 4. Submission of Matters to a Vote of Security Holders......... *

PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters......................................... 4
Item 6. Selected Financial Data..................................... *
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 5
Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995..................................................... 7
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk........................................................ 8
Item 8. Financial Statements and Supplementary Data................. 9
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 28

PART III
Item 10. Directors and Executive Officers of the Registrant.......... *
Item 11. Executive Compensation...................................... *
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................. *
Item 13. Certain Relationships and Related Transactions.............. *

PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K......................................................... 28
Signatures.................................................. 30
</TABLE>

- ---------------

* No response to this item is included herein for the reason that no response is
required pursuant to the reduced disclosure format permitted by General
Instruction I to Form 10-K.

i
<PAGE> 3

GLOSSARY

The following abbreviations, acronyms, or defined terms used in this Form
10-K are defined below:

<TABLE>
<CAPTION>
DEFINITION
----------
<S> <C>
Bcf............................... Billion cubic feet
Company........................... Tennessee Gas Pipeline Company and its subsidiaries
Court of Appeals.................. United States Court of Appeals for the District of Columbia Circuit
Dth/d............................. Dekatherms per day
East Tennessee.................... East Tennessee Natural Gas Company, an affiliate of Tennessee Gas
Pipeline Company, formerly a wholly owned subsidiary of Tennessee
Gas Pipeline Company
EPA............................... United States Environmental Protection Agency
El Paso........................... El Paso Energy Corporation, the indirect parent of Tennessee Gas
Pipeline Company
EPNG.............................. El Paso Natural Gas Company, a wholly owned subsidiary of El Paso
Energy Corporation
EPTPC............................. El Paso Tennessee Pipeline Co., a direct subsidiary of El Paso
Energy Corporation and parent of Tennessee Gas Pipeline Company
FERC.............................. Federal Energy Regulatory Commission
GSR............................... Gas supply realignment
Midwestern........................ Midwestern Gas Transmission Company, an affiliate of Tennessee Gas
Pipeline Company, formerly a wholly owned indirect subsidiary of
Tennessee Gas Pipeline Company
MMcf(/d).......................... Million cubic feet (per day)
PCB(s)............................ Polychlorinated biphenyl(s)
PRP(s)............................ Potentially responsible party(ies)
TGP............................... Tennessee Gas Pipeline Company, a wholly owned subsidiary of El
Paso Tennessee Pipeline Co.
</TABLE>

ii
<PAGE> 4

PART I

ITEM 1. BUSINESS

GENERAL

TGP, a Delaware corporation, is a wholly owned subsidiary of EPTPC. The
major business of the Company consists of the interstate transportation and
storage of natural gas. It conducts its business activities through two natural
gas transmission systems and a storage facility, each of which is discussed
below.

The TGP system. The TGP system consists of approximately 14,700 miles of
pipeline with a design capacity of 5,730 MMcf/d. During 1999, TGP transported
natural gas volumes averaging approximately 75 percent of its capacity. The TGP
system serves the northeast section of the United States, including the New York
City and Boston metropolitan areas. The multiple-line system begins in the
gas-producing regions of Louisiana, including the Gulf of Mexico, and south
Texas. TGP also recently completed an interconnect at the United States-Mexico
border.

Portland Natural Gas Transmission. The Company has an approximate 19
percent ownership interest in the Portland Natural Gas Transmission system
("Portland"). Portland is a 292 mile interstate natural gas pipeline with a
design capacity of 215 MMcf/d extending from the Canadian border near Pittsburg,
New Hampshire to Dracut, Massachusetts. During 1999, Portland transported
volumes averaging approximately 34 percent of its capacity.

Bear Creek Storage. The Company and Southern Natural Gas Company, a wholly
owned subsidiary of El Paso, each own a 50 percent interest in Bear Creek
Storage Company ("Bear Creek"), which owns and operates an underground natural
gas storage facility located in Louisiana. Services are provided pursuant to the
authorization and subject to the jurisdiction of FERC. Bear Creek has a capacity
of 50 Bcf of base gas and 57 Bcf of working storage capacity. Bear Creek's
storage capacity is committed equally to TGP and Southern Natural Gas Company
under long-term contracts.

From time to time, the Company holds open seasons in an effort to
capitalize on pipeline expansion opportunities. TGP has completed an open season
for the Eastern Express Project 2000 to provide gas transportation for the
growing markets in the northeast. As a result, TGP filed and received FERC
approval for the Eastern Express expansion, which will begin service in November
2000. In the fall of 1999, TGP completed and placed in service an international
border crossing at Reynosa, Tamaulipas, Mexico, and an interconnect with Pemex
Gas y Petroquimica Basica ("Pemex"), a Mexican state-owned company, to provide
the import and export of gas to and from Mexico.

REGULATORY ENVIRONMENT

TGP, Portland, and Bear Creek are subject to the jurisdiction of FERC in
accordance with the Natural Gas Act of 1938 and the Natural Gas Policy Act of
1978. Each system operates under separate FERC approved tariffs. These FERC
approved tariffs establish rates, terms, and conditions under which each system
provides services to its customers.

In July 1998, FERC issued a Notice of Proposed Rulemaking ("NOPR") in which
it sought comments on a wide range of initiatives to change the manner in which
short-term (less than one year) transportation markets are regulated. On
February 9, 2000, the FERC issued a final ruling in response to the NOPR. Among
other things, the rule (i) allows pipelines to file to implement peak and
off-peak rates; (ii) removes the price cap for released capacity; (iii) requires
pipelines to make changes to their tariffs regarding customer imbalances,
penalties and pipeline operations; and (iv) increases the amount and type of
information that pipelines must make available to the FERC and its customers.

1
<PAGE> 5

methodology deterred the development of market centers (centralized locations
where buyers and sellers can physically exchange gas). Comments were filed with
FERC in January 1999. This matter is still pending before FERC.

The Company's interstate systems are also subject to the Natural Gas
Pipeline Safety Act of 1968, as amended, which establishes pipeline and
liquified natural gas plant safety requirements, and the National Environmental
Policy Act and other environmental legislation. Each of the systems has a
continuing program of inspection designed to keep all of the facilities in
compliance with pollution control and pipeline safety requirements, and the
Company believes that its systems are in substantial compliance with applicable
requirements.

MARKETS AND COMPETITION

The Company's interstate systems face varying degrees of competition from
alternative energy sources, such as electricity, hydroelectric power, coal, and
fuel oil. Also, the potential consequences of proposed and ongoing restructuring
and deregulation of the electric power industry are currently unclear. Such
restructuring and deregulation may benefit the natural gas industry by creating
more demand for natural gas turbine generated electric power, or it may hamper
demand by allowing a more effective use of surplus electric capacity through
increased wheeling as a result of open access.

Customers of TGP, none of which individually represents more than 10
percent of the revenues on TGP's system, include natural gas producers,
marketers and end-users, as well as other gas transmission and distribution
companies. At the beginning of 1999, contracts representing 70 percent of TGP's
firm transportation capacity were due to expire by November 2000. However, as a
result of negotiations to extend or restructure these contracts, customers whose
contracts expire by November 2000 now represent only approximately 20 percent of
firm transportation capacity. The conditions of settlements and extensions are
similar to the original contracts and 80 percent of TGP's contracted firm
transportation capacity currently has an average term in excess of four years.
TGP continues to pursue future markets and customers for the capacity that is
not committed beyond November 2000 and expects this capacity will be placed
under a combination of long-term and short-term contracts. However, there can be
no assurance that TGP will be able to replace these contracts or that the terms
of new contracts will be as favorable to TGP as the existing ones.

In a number of key markets, TGP faces competitive pressure from other major
pipeline systems, which enables local distribution companies and end-users to
choose a supplier or switch suppliers based on the short-term price of natural
gas and the cost of transportation. Competition among pipelines is particularly
intense in TGP's supply areas, Louisiana and Texas. In some instances, TGP has
had to discount its transportation rates in order to maintain market share. The
renegotiation of TGP's remaining expiring contracts may be adversely affected by
these competitive factors.

ENVIRONMENTAL

A description of the Company's environmental activities is included in Item
8, Financial Statements and Supplementary Data, Note 6, which is incorporated
herein by reference.

EMPLOYEES

The Company had approximately 1,300 full-time employees on December 31,
1999. The Company has no collective bargaining arrangements and no significant
changes in the work force have occurred since December 31, 1999.

2
<PAGE> 6

ITEM 2. PROPERTIES

A description of the Company's properties is included in Item 1, Business,
and is incorporated herein by reference.

The Company is of the opinion that it has satisfactory title to the
properties owned and used in its businesses, subject to the liens for current
taxes, liens incident to minor encumbrances, and easements and restrictions that
do not materially detract from the value of such property or the interests
therein or the use of such properties in its businesses. The Company believes
that its physical properties are adequate and suitable for the conduct of its
business in the future.

ITEM 3. LEGAL PROCEEDINGS

See Item 8, Financial Statements and Supplementary Data, Note 6, which is
incorporated herein by reference.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Item 4, Submission of Matters to a Vote of Security Holders, has been
omitted from this report pursuant to the reduced disclosure format permitted by
General Instruction I to Form 10-K.

3
<PAGE> 7

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

All of TGP's common stock, par value $5 per share (the "Common Stock"), is
owned by EPTPC and, accordingly, there is no public trading market for such
securities.

Dividends in such amounts as may be determined by the Board of Directors of
TGP may be declared and paid on the Common Stock from time to time out of any
funds legally available therefore. On December 31, 1998, the Company declared
and paid to EPTPC a non-cash dividend of its investment in subsidiaries in the
amount of $1,940 million in connection with the tax-free internal reorganization
discussed in Item 8, Financial Statements and Supplementary Data, Note 1. In
March 1997, the Company declared and paid a $889 million cash dividend to EPTPC
and, in December 1997, the Company declared and paid a $1,083 million non-cash
dividend to EPTPC which was used to offset the Company's $1,083 million note
receivable from EPTPC.

ITEM 6. SELECTED FINANCIAL DATA

Item 6, Selected Financial Data, has been omitted from this report pursuant
to the reduced disclosure format permitted by General Instruction I to Form
10-K.

4
<PAGE> 8

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

This item is presented pursuant to the reduced disclosure format permitted
by General Instruction I to Form 10-K.

RESULTS OF OPERATIONS

The Company evaluates performance based on earnings before interest expense
and income taxes, excluding affiliated interest income ("EBIT"). Accordingly,
results of operations presented herein are on that basis.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------
1999 1998
----- -----
(IN MILLIONS)
<S> <C> <C>
Operating revenues.......................................... $ 704 $ 699
Operating expenses.......................................... (374) (413)
Other income................................................ 22 24
----- -----
EBIT...................................................... $ 352 $ 310
===== =====
</TABLE>

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

Operating revenues for the year ended December 31, 1999, were $5 million
higher than 1998. This increase was primarily due to the favorable resolution of
regulatory issues during 1999 related to the Company's New England rates, a
downward revision in 1998 of the amount of recoverable interest on GSR costs and
new contracts and services in 1999. These increases were partially offset by
lower system throughput, fewer contract buyouts and lower other operating
revenues in 1999.

Operating expenses for the year ended December 31, 1999, were $39 million
lower than 1998. The decrease was primarily due to the favorable resolution of
the Company's customer imbalance mechanism, lower fuel costs associated with
lower throughput levels and lower direct operating and maintenance costs in
1999. The decrease was offset by an increase in shared services allocations.

Other income for the year ended December 31, 1999, was $2 million lower
than 1998 primarily due to interest income received in the third quarter of 1998
on a favorable sales and use tax settlement and lower earnings from equity
investments during 1999. The decrease was partially offset by a gain on the sale
of an asset in 1999.

INTEREST AND DEBT EXPENSE

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

Non-affiliated Interest and Debt Expense

Interest and debt expense for the year ended December 31, 1999, was $18
million higher than 1998 due to increased borrowings in October 1998 to fund
capital expenditures and other investing expenditures.

Affiliated Interest (Income) Expense, Net

Affiliated interest income, net was $24 million for the year ended December
31, 1999, compared to affiliated interest expense, net of $57 million for the
year ended December 31, 1998. The increase to affiliated interest income, net
was due to a reduction in affiliated debt and increased advances to El Paso.

5
<PAGE> 9

INCOME TAX EXPENSE

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

Income tax expense of $82 million in 1999 and $39 million in 1998 resulted
in an effective tax rate of 32 percent and 26 percent for 1999 and 1998,
respectively. The higher rate is primarily due to the impact of prior year tax
adjustments recorded in 1998 under Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes.

COMMITMENTS AND CONTINGENCIES

See Item 8, Financial Statements and Supplementary Data, Note 6, for a
discussion of the Company's Commitments and Contingencies, which is incorporated
herein by reference.

OTHER

In December 1999, the Company filed an application with FERC for the
Stagecoach Expansion Project. The project will connect the Stagecoach Storage
Field in Tioga County, New York to TGP's mainline. The new lateral will consist
of 24 miles of pipe and will have a capacity of 500,000 Dth/d. In addition, the
project will expand TGP's 300 line to provide 90,000 Dth/d of firm
transportation service from Bradford County, Pennsylvania to its interconnect
with New Jersey Natural Gas. The total cost for the project is estimated at $87
million with service on the lateral scheduled to begin in August 2001 and
service on TGP's 300 line in November 2001.

Year 2000

To coordinate the phases of the Year 2000 project, El Paso established an
executive steering committee and a project team. The phases of the project were:
(i) awareness; (ii) assessment; (iii) remediation; (iv) testing; (v)
implementation of the necessary modifications and (vi) contingency planning. The
Company participated in El Paso's Year 2000 project as described below. The goal
of the Year 2000 project was to ensure that all of the critical systems and
processes under the Company's direct control remained functional. As of December
31, 1999, the Company had substantially completed the above phases for all
critical systems. While the Year 2000 rollover date has passed with no apparent
disruptions experienced by the Company's systems and processes, it remains
possible that third parties may have experienced disruptions which have not yet
manifested any impact on the Company, but could in the future. Accordingly, the
Company is prepared to implement any contingency plans should a disruption
occur. While the total cost of the Company's Year 2000 project continues to be
accumulated, the Company does not expect to incur any remaining material costs
in 2000. As of December 31, 1999, the Company has incurred expenses of
approximately $5 million and has capitalized costs of approximately $4 million.

The above disclosure is a "YEAR 2000 READINESS DISCLOSURE." To the extent
that any reader of the above Year 2000 Readiness Disclosure is other than an
investor or potential investor in the Company's -- or an affiliate's -- equity
or debt securities, this disclosure is made for the SOLE PURPOSE of
communicating or disclosing information aimed at correcting, helping to correct
and/or avoiding Year 2000 failures.

6
<PAGE> 10

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

This report contains or incorporates by reference forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Where any forward-looking statement includes a statement of the
assumptions or bases underlying the forward-looking statement, we caution that,
while we believe these assumptions or bases to be reasonable and to be made in
good faith, assumed facts or bases almost always vary from the actual results,
and the differences between assumed facts or bases and actual results can be
material, depending upon the circumstances. Where, in any forward-looking
statement, we or our management express an expectation or belief as to future
results, that expectation or belief is expressed in good faith and is believed
to have a reasonable basis. We cannot assure you, however, that the statement of
expectation or belief will result or be achieved or accomplished. The words
"believe," "expect," "estimate," "anticipate" and similar expressions will
generally identify forward-looking statements.

7
<PAGE> 11

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's primary market risk is exposure to changing interest rates.
The table below presents the weighted average interest rates by expected
maturity dates of those instruments that present interest rate risk to the
Company. As of December 31, 1999 and 1998, the carrying amounts of short-term
borrowings are representative of fair value because of the short-term maturity
of these instruments. The fair value of fixed rate long-term debt has been
estimated based on quoted market prices for the same or similar issues.

<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
------------------------------------------------------------------- ---------------------
EXPECTED FISCAL YEAR OF MATURITY
------------------------------------------------------------------- CARRYING
2000 2001 2002 2003 2004 THEREAFTER TOTAL FAIR VALUE AMOUNTS FAIR VALUE
---- ---- ---- ---- ---- ---------- ------ ---------- -------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES:
Short-term debt -- variable
rate.............................. $649 $ 649 $ 649 $ 190 $ 190
Average interest rate......... 6.3%
Long-term debt, including current
portion -- fixed rate........... $ 1 $1,386 $1,387 $1,284 $1,354 $1,441
Average interest rate......... 6.2% 7.2%
</TABLE>

8
<PAGE> 12

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

TENNESSEE GAS PIPELINE COMPANY

CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1999 1998 1997
------ ------ -------
<S> <C> <C> <C>
Operating revenues
Transportation............................................ $681 $680 $ 696
Other..................................................... 23 19 33
---- ---- -----
704 699 729
---- ---- -----
Operating expenses
Operation and maintenance................................. 194 242 306
Depreciation, depletion and amortization.................. 137 134 127
Taxes, other than income taxes............................ 43 37 47
---- ---- -----
374 413 480
---- ---- -----
Operating income............................................ 330 286 249
---- ---- -----
Other income
Equity investment earnings................................ 9 12 12
Other, net................................................ 13 12 2
---- ---- -----
22 24 14
---- ---- -----
Income before interest and income taxes..................... 352 310 263
---- ---- -----
Non-affiliated interest and debt expense.................... 120 102 75
Affiliated interest (income) expense, net................... (24) 57 36
Income tax expense.......................................... 82 39 52
---- ---- -----
178 198 163
---- ---- -----
Income before discontinued operations....................... 174 112 100
Discontinued operations, net of income taxes................ -- 97 66
---- ---- -----
Net income.................................................. $174 $209 $ 166
==== ==== =====
</TABLE>

The accompanying Notes are an integral part of these Consolidated Financial
Statements.

9
<PAGE> 13

TENNESSEE GAS PIPELINE COMPANY

CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1999 1998
------ ------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................................. $ 4 $ 5
Accounts and notes receivable, net
Customer............................................... 92 66
Affiliated companies................................... 459 5
Other.................................................. 73 65
Materials and supplies.................................... 17 15
Deferred income taxes..................................... 44 38
Other..................................................... 18 33
------ ------
Total current assets.............................. 707 227
Property, plant, and equipment, net......................... 4,488 4,440
Investment in unconsolidated affiliates..................... 123 74
Other....................................................... 103 113
------ ------
Total assets...................................... $5,421 $4,854
====== ======

LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts and notes payable
Trade.................................................. $ 74 $ 72
Affiliated companies................................... 54 127
Other.................................................. 88 74
Short-term borrowings (including current maturities on
long-term debt)........................................ 650 191
Taxes payable............................................. 105 32
Other..................................................... 85 189
------ ------
Total current liabilities......................... 1,056 685
------ ------
Long-term debt, less current maturities..................... 1,353 1,353
------ ------
Deferred income taxes....................................... 1,175 1,150
------ ------
Other....................................................... 275 278
------ ------

Commitments and contingencies (See Note 6)

Stockholder's equity:
Common stock, par value $5 per share; authorized 300
shares; issued 208 shares.............................. -- --
Additional paid-in capital................................ 1,388 1,388
Retained earnings......................................... 174 --
------ ------
Total stockholder's equity........................ 1,562 1,388
------ ------
Total liabilities and stockholder's equity........ $5,421 $4,854
====== ======
</TABLE>

The accompanying Notes are an integral part of these Consolidated Financial
Statements.

10
<PAGE> 14

TENNESSEE GAS PIPELINE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Cash flows from operating activities
Net income.................................................. $ 174 $ 209 $ 166
Less income from discontinued operations, net of income
taxes.................................................. -- 97 66
----- ----- -----
Income from continuing operations........................... 174 112 100
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation, depletion and amortization............... 137 134 127
Undistributed earnings in equity investments........... (3) (5) (1)
Deferred income taxes.................................. 22 68 178
Gain on disposition of property........................ (2) (2) --
Working capital changes, net of non-cash transactions
Accounts and notes receivable........................ (34) (332) 116
Accounts and notes payable........................... 17 1 (216)
Taxes payable........................................ 73 (8) 19
Other working capital changes........................ (91) 94 (35)
Other.................................................. 8 236 17
----- ----- -----
Cash provided by continuing operations............... 301 298 305
Cash provided by (used in) discontinued operations... -- 185 (46)
----- ----- -----
Net cash provided by operating activities......... 301 483 259
----- ----- -----
Cash flows from investing activities
Capital expenditures...................................... (177) (126) (102)
Investment in joint ventures and equity investees......... (46) (10) (4)
Proceeds from sales of assets............................. 10 16 7
Cost of removal of assets................................. (20) (22) (18)
Net change in other affiliated advances................... (451) (642) 111
Investment in annuity..................................... -- -- (40)
Cash provided by (used in) investing activities by
discontinued operations................................ -- 217 (138)
----- ----- -----
Net cash used in investing activities............. (684) (567) (184)
----- ----- -----
Cash flows from financing activities
Net commercial paper borrowings........................... 459 190 --
Revolving credit borrowings............................... -- -- 417
Revolving credit repayments............................... -- (417) --
Increase (decrease) in note payable to affiliate.......... (76) 317 (670)
Net proceeds from issuance of long-term debt.............. -- 391 883
Long-term debt retirements................................ (1) (1) --
Dividend to EPTPC......................................... -- -- (889)
Cash provided by (used in) financing activities by
discontinued operations................................ -- (414) 189
----- ----- -----
Net cash provided by (used in) financing
activities...................................... 382 66 (70)
----- ----- -----
Increase (decrease) in cash and cash equivalents............ (1) (18) 5
Less increase (decrease) in cash and cash equivalents
related to discontinued operations..................... -- (12) 5
----- ----- -----
Decrease in cash and cash equivalents from continuing
operations................................................ (1) (6) --
Cash and cash equivalents
Beginning of period....................................... 5 11 11
----- ----- -----
End of period............................................. $ 4 $ 5 $ 11
===== ===== =====
</TABLE>

The accompanying Notes are an integral part of these Consolidated Financial
Statements.

11
<PAGE> 15

TENNESSEE GAS PIPELINE COMPANY

CONSOLIDATED STATEMENTS OF
STOCKHOLDER'S EQUITY
(IN MILLIONS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL NOTES
--------------- PAID-IN RETAINED RECEIVABLE TOTAL
SHARES AMOUNT CAPITAL EARNINGS FROM EPTPC EQUITY
------ ------ ---------- -------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
January 1, 1997................................... 208 $-- $ 2,625 $ -- $ (568) $ 2,057
Net income...................................... 166 166
Increase in note receivable from EPTPC.......... (515) (515)
Cash dividend to EPTPC.......................... (841) (48) (889)
Dividend of note receivable from parent......... (965) (118) 1,083 --
Refinancing of pushed down long-term debt....... 900 900
Acquisition adjustments to record assets and
liabilities at fair value.................... 107 107
--- --- ------- ----- ------ -------
December 31, 1997................................. 208 -- 1,826 -- -- 1,826
Net income...................................... 209 209
Non-cash contributions from EPTPC............... 1,293 1,293
Non-cash dividend to EPTPC...................... (1,731) (209) (1,940)
--- --- ------- ----- ------ -------
December 31, 1998................................. 208 -- 1,388 -- -- 1,388
Net income...................................... 174 174
--- --- ------- ----- ------ -------
December 31, 1999................................. 208 $-- $ 1,388 $ 174 $ -- $ 1,562
=== === ======= ===== ====== =======
</TABLE>

The accompanying Notes are an integral part of these Consolidated Financial
Statements.

12
<PAGE> 16

TENNESSEE GAS PIPELINE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The consolidated financial statements of the Company include the accounts
of all majority-owned, controlled subsidiaries after the elimination of all
significant intercompany accounts and transactions. Investments in companies
where the Company has the ability to exert significant influence over, but not
control operating and financial policies are accounted for using the equity
method. The consolidated financial statements for previous periods include
certain reclassifications that were made to conform to the current year
presentation. Such reclassifications have no impact on reported net income or
stockholder's equity.

Tax-free Internal Reorganization (Discontinued Operations)

On December 31, 1998, El Paso completed a series of steps to effect an
internal reorganization in accordance with a private letter ruling received from
the IRS. Initially, certain energy marketing, field services, and international
operations of EPNG were transferred to EPTPC, the Company's parent. Following
these transfers, EPTPC contributed those operations to the Company. The total
value of these contributions was $1,293 million. The Company completed the
reorganization primarily through a series of intercompany transactions,
including distributing to EPTPC its interests in those subsidiaries contributed
to it. The total value of the dividend was $1,940 million.

After completing the reorganization, the Company's primary asset was an
interstate pipeline system known as the TGP system. In the reorganization, the
Company transferred the following assets, liabilities, and operations to El Paso
or other subsidiaries of El Paso, and eliminated them from its consolidated
financial statements: (i) the East Tennessee interstate gas pipeline system;
(ii) the Midwestern interstate gas pipeline system; (iii) all international
subsidiaries; (iv) all field services operations; (v) all trading and marketing
operations; and (vi) certain corporate and discontinued operations.

The Company has treated the assets and operations distributed as though
they were discontinued operations as of December 31, 1998, and accordingly has
reclassified all prior periods to reflect this treatment. Revenues related to
those items treated as discontinued operations were $4,188 million and $2,903
million for the years ended December 31, 1998 and 1997, respectively.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities that exist at
the date of the financial statements. Actual results are likely to differ from
those estimates.

Accounting for Regulated Operations

The Company's interstate natural gas systems are subject to the
jurisdiction of FERC in accordance with the Natural Gas Act of 1938 and the
Natural Gas Policy Act of 1978. Each system operates under separate FERC
approved tariffs which establish rates, terms and conditions under which each
system provides services to its customers. The Company's businesses that are
subject to the regulations and accounting requirements of FERC have followed the
accounting requirements of Statement of Financial Accounting Standards ("SFAS")
No. 71, Accounting for the Effects of Certain Types of Regulation, which may
differ from the accounting requirements of non-regulated entities. Transactions
that have been recorded differently as a result of regulatory accounting
requirements include: GSR costs to be recovered under a demand and interruptible
surcharge, environmental costs to be recovered under a demand surcharge, the
capitalization of an equity return component on regulated capital projects, and
certain benefits and other costs and taxes included in or expected to be
included in future rates, including costs to refinance debt. When the accounting
method

13
<PAGE> 17

followed is prescribed by or allowed by the regulatory authority for rate-making
purposes, such method conforms to the generally accepted accounting principle of
matching costs with the revenues to which they apply.

Changes in the regulatory and economic environment may create, at some
point in the future, circumstances in which the application of regulatory
accounting principles will no longer be appropriate. Factors which could impact
this assessment include an inability to recover cost increases under rate caps
or rate case moratoriums, an inability to recover capitalized costs, including
an adequate return on those costs through the ratemaking process, excess
capacity or significant discounting of rates in the markets served by the
Company, and the impacts of ongoing initiatives in and deregulation of the
natural gas industry. Should these factors cause regulatory accounting
principles to no longer be applied, an amount would be charged to earnings as an
extraordinary item. At December 31, 1999, this amount was estimated to be
approximately $30 million, net of income taxes. Any potential charge would be
non-cash and would have no direct effect on the regulated companies' ability to
seek recovery of the underlying deferred costs in their future rate proceedings
or on their ability to collect the rates set thereby.

Cash and Cash Equivalents

Short-term investments purchased with an original maturity of three months
or less are considered cash equivalents.

Allowance for Doubtful Accounts and Notes Receivable

The Company has established a provision for losses on accounts and notes
receivable which may become uncollectible. Collectibility is reviewed regularly,
and the allowance is adjusted as necessary primarily under the specific
identification method. At December 31, 1999 and 1998, the allowance was $3
million and $4 million, respectively.

Gas Imbalances

The Company values gas imbalances due to or due from shippers and operators
at the appropriate index price. Gas imbalances represent the difference between
gas receipts from and gas deliveries to the Company's transportation and storage
customers. Gas imbalances arise when these customers deliver more or less gas
into the pipeline than they take out. Natural gas imbalances are settled in cash
or made up in-kind subject to the pipelines' various terms. The allowance for
gas imbalances was less than $1 million at December 31, 1999, and $5 million at
December 31, 1998.

Materials and Supplies

Materials and supplies are valued at the lower of cost or market with cost
determined using the average cost method.

Property, Plant, and Equipment

The Company's regulated property, plant, and equipment is subject to
oversight by the FERC. The objectives of this regulation are to ensure the
proper recovery of capital investments in rates. Such recovery is generally
accomplished by allowing a return of the investment through inclusion of
depreciation expense in the cost of service. Rates also allow for a return on
the net unrecovered rate base. Specific procedures are prescribed by FERC to
control capitalized costs, depreciation, and the disposal of assets. SFAS No. 71
specifically acknowledges the obligation of regulated companies to comply with
regulated accounting procedures, even when they conflict with other generally
accepted accounting principle pronouncements.

Regulated property, plant, and equipment is recorded at original cost of
construction or, on acquisition, the cost to the first party committing the
asset to utility services. Construction cost includes direct labor and
materials, as well as indirect charges such as overhead and an allowance for
both debt and equity funds used

14
<PAGE> 18

during construction. Replacements or betterments of major units of property are
capitalized, while replacements or additions of minor units of property are
expensed.

Depreciation for regulated property, plant, and equipment is calculated
using the composite method. Assets with similar economic characteristics are
grouped. The depreciation rate prescribed in the rate settlement is applied to
the gross investment for the group until net book value of the group is equal to
the salvage value. Currently, depreciation rates vary from 1 percent to 24
percent. This results in remaining economic lives of groups ranging from 2 to 30
years. Depreciation rates are reevaluated in conjunction with the rate making
process.

When regulated property, plant, and equipment is retired, due to
abandonment or replacement, the original cost, plus the cost of retirement, less
salvage, is charged to accumulated depreciation. No gain or loss is recognized
unless an entire operating unit, as defined by FERC, has been retired. Gains or
losses on dispositions of operating units are included in income.

Additional acquisition cost assigned to utility plant represents the excess
of allocated purchase costs over historical costs that resulted from the
December 1996 acquisition of EPTPC, the Company's parent, by El Paso. These
costs are being amortized on a straight-line basis using FERC approved rates.

Included in the Company's property, plant, and equipment is construction
work in progress of approximately $149 million and $86 million at December 31,
1999 and 1998, respectively. The capitalized allowance for debt and equity funds
used during construction for each of the years ended December 31, 1999 and 1998
was $2 million.

The Company evaluates impairment of its property, plant, and equipment in
accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of.

Revenue Recognition

The Company recognizes revenue from natural gas transportation in the
period the service is provided. Reserves are provided on revenues collected
subject to refund when appropriate.

Environmental Costs

Expenditures for ongoing compliance with environmental regulations that
relate to current operations are expensed or capitalized as appropriate.
Expenditures that relate to an existing condition caused by past operations, and
which do not contribute to current or future revenue generation, are expensed.
Liabilities are recorded when environmental assessments indicate that
remediation efforts are probable and the costs can be reasonably estimated.
Estimates of the liability are based upon currently available facts, existing
technology and presently enacted laws and regulations taking into consideration
the likely effects of inflation and other societal and economic factors, and
include estimates of associated legal costs. These amounts also consider prior
experience in remediating contaminated sites, other companies' clean-up
experience and data released by the EPA or other organizations. These estimated
liabilities are subject to revision in future periods based on actual costs or
new circumstances, and are included in the balance sheets at their undiscounted
amounts. Recoveries are evaluated separately from the liability and, when
recovery is assured, are recorded and reported separately from the associated
liability in the consolidated financial statements as an asset.

Income Taxes

Income taxes are based on income reported for tax return purposes along
with a provision for deferred income taxes. Deferred income taxes are provided
to reflect the tax consequences in future years of differences between the
financial statement and tax bases of assets and liabilities at each year end.
Tax credits are accounted for under the flow-through method, which reduces the
provision for income taxes in the year the tax credits first become available.
Deferred tax assets are reduced by a valuation allowance when, based upon
management's estimates, it is more likely than not that a portion of those
assets will not be realized in a future

15
<PAGE> 19

period. The estimates utilized in the recognition of deferred tax assets are
subject to revision in future periods based on new facts or circumstances.

El Paso maintains a tax sharing policy which provides, among other things,
that (i) each company in a taxable income position will be currently charged
with an amount equivalent to its federal income tax computed on a separate
return basis, and (ii) each company in a tax loss position will be reimbursed
currently to the extent its deductions, including general business credits, were
utilized in the consolidated return. Under the policy, El Paso pays all federal
income taxes directly to the IRS and will bill or refund, as applicable, its
subsidiaries for their applicable portion of such income tax payments. Prior to
1999, the Company had a tax sharing agreement with EPTPC which had similar
provisions. Commencing with the 1999 tax return, EPTPC and its 80 percent or
more owned subsidiaries, including the Company, joined the El Paso consolidated
federal income tax return.

Accounting for Derivative Instruments and Hedging Activities

In June 1998, SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, was issued by the Financial Accounting Standards Board to
establish accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. This pronouncement requires that an entity classify all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. If certain conditions are
met, a derivative may be specifically designated as (i) a hedge of the exposure
to changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment, (ii) a hedge of the exposure to variable cash
flows of a forecasted transaction, or (iii) a hedge of the foreign currency
exposure of a net investment in a foreign operation, an unrecognized firm
commitment, an available-for-sale security, or a foreign-currency-denominated
forecasted transaction. Under SFAS No. 133, accounting for the changes in the
fair value of a derivative depends on the intended use and its resulting
designation. The standard was amended by SFAS No. 137 issued in June 1999. The
amendment defers the effective date to fiscal years beginning after June 15,
2000. The Company is currently evaluating the effects of this pronouncement.

2. INCOME TAXES

The following table reflects the components of income tax expense from
continuing operations for the years ended December 31:

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- -----
(IN MILLIONS)
<S> <C> <C> <C>
Current
Federal .................................................. $ 76 $(15) $ (91)
State..................................................... (16) (14) (35)
---- ---- -----
60 (29) (126)
---- ---- -----
Deferred
Federal .................................................. 17 65 147
State..................................................... 5 3 31
---- ---- -----
22 68 178
---- ---- -----
Total income tax expense.......................... $ 82 $ 39 $ 52
==== ==== =====
</TABLE>

16
<PAGE> 20

Income tax expense of the Company from continuing operations differs from
the amount computed by applying the statutory federal income tax rate (35
percent) to income before taxes. The following table outlines the reasons for
the differences for the periods ended December 31:

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Income tax expense at the statutory federal rate of 35%..... $90 $53 $53
Increase (decrease)
State income tax, net of federal income tax benefit....... (7) (7) (2)
Other..................................................... (1) (7) 1
--- --- ---
Income tax expense.......................................... $82 $39 $52
=== === ===
Effective tax rate.......................................... 32% 26% 34%
=== === ===
</TABLE>

Income tax expense related to the assets, liabilities, and operations
treated as discontinued operations as a result of the tax-free internal
reorganization was $44 million and $36 million for the years ended December 31,
1998 and 1997, respectively.

The following table reflects the components of the net deferred tax
liability from continuing operations at December 31:

<TABLE>
<CAPTION>
1999 1998
------ ------
(IN MILLIONS)
<S> <C> <C>
Deferred tax liabilities
Accumulated tax depreciation over book depreciation....... $1,391 $1,386
Regulatory issues......................................... 57 68
Other..................................................... 16 10
------ ------
Total deferred tax liability...................... 1,464 1,464
------ ------
Deferred tax assets
U.S. net operating loss and tax credit carryovers......... 55 21
Accrual for regulatory issues............................. 65 108
Environmental reserve..................................... 62 59
Other..................................................... 155 168
Valuation allowance....................................... (4) (4)
------ ------
Total deferred tax asset.......................... 333 352
------ ------
Net deferred tax liability.................................. $1,131 $1,112
====== ======
</TABLE>

As of December 31, 1999, the Company has $3 million of alternative minimum
tax credit carryovers, $145 million of net operating loss carryovers and $2
million of capital loss carryovers. The alternative minimum tax credits carry
forward indefinitely. The net operating loss carry forward periods end as
follows -- approximately $4 million in 2007, $94 million in 2012 and $47 million
in 2019. The carry forward period for the capital loss ends in 2003. Usage of
these carryovers is subject to the limitations provided under Sections 382 and
383 of the Internal Revenue Code as well as the separate return limitation year
rules of IRS regulations.

The Company has recorded a valuation allowance of $4 million to reflect the
estimated amount of deferred tax assets which may not be realized due to the
expiration of net operating loss carryovers of an acquired company. Any tax
benefits subsequently recognized from reversal of this valuation allowance will
be allocated to additional acquisition cost assigned to utility plant.

Prior to 1999, EPTPC and its subsidiaries, including TGP and its
subsidiaries, filed a consolidated federal income tax return and El Paso and its
other subsidiaries filed a separate consolidated federal income tax return. As a
result of the tax-free reorganization described in Note 1, El Paso and its
subsidiaries, including EPTPC and its subsidiaries, will file one consolidated
federal income tax return.

17
<PAGE> 21

3. FINANCIAL INSTRUMENTS

Fair Value of Financial Instruments

The following disclosure of the estimated fair value of financial
instruments is presented in accordance with the requirements of SFAS No. 107.
The estimated fair value amounts have been determined by the Company using
available market information and valuation methodologies.

As of December 31, 1999, and 1998, the carrying amounts of certain
financial instruments held by the Company, including cash, cash equivalents,
short-term borrowings, and trade receivables and payables are representative of
fair value because of the short-term maturity of these instruments. The fair
value of debt with fixed interest rates has been estimated based on quoted
market prices for the same or similar issues.

The following table reflects the carrying amount and estimated fair value
of the Company's financial instruments at December 31:

<TABLE>
<CAPTION>
1999 1998
--------------------- ---------------------
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Balance sheet financial instruments:
Long-term debt..................................... $1,354 $1,284 $1,354 $1,441
</TABLE>

4. PROPERTY, PLANT, AND EQUIPMENT

Property, plant and equipment consisted of the following at December 31:

<TABLE>
<CAPTION>
1999 1998
------ ------
(IN MILLIONS)
<S> <C> <C>
Property, plant, and equipment, at cost..................... $2,479 $2,316
Less accumulated depreciation............................... 304 216
------ ------
2,175 2,100
Additional acquisition cost assigned to utility plant, net
of accumulated amortization............................... 2,313 2,340
------ ------
Total property, plant, and equipment, net......... $4,488 $4,440
====== ======
</TABLE>

Current FERC policy does not permit the Company to recover amounts in
excess of original cost allocated in purchase accounting to its regulated
operations through rates.

5. DEBT AND OTHER CREDIT FACILITIES

The average interest rate of short-term borrowings was 6.6% and 5.8% at
December 31, 1999 and 1998, respectively. The Company had the following
short-term borrowings, including current maturities of long-term debt, at
December 31:

<TABLE>
<CAPTION>
1999 1998
----- -----
(IN MILLIONS)
<S> <C> <C>
Commercial Paper............................................ $649 $190
Current maturities of long-term debt........................ 1 1
---- ----
$650 $191
==== ====
</TABLE>

18
<PAGE> 22

Long-term debt outstanding consisted of the following at December 31:

<TABLE>
<CAPTION>
1999 1998
------ ------
(IN MILLIONS)
<S> <C> <C>
6% Debentures due 2011..................................... $ 86 $ 86
7.5% Debentures due 2017................................... 300 300
7% Debentures due 2027..................................... 300 300
7% Debentures due 2028..................................... 400 400
7.625% Debentures due 2037................................. 300 300
Other...................................................... 1 2
------ ------
1,387 1,388
Less: Unamortized discount................................. 33 34
Current Maturities................................... 1 1
------ ------
Total long-term debt, less current maturities.... $1,353 $1,353
====== ======
</TABLE>

The following are aggregate maturities of long-term debt for the next 5
years and in total thereafter:

<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C>
2000.................................... $ 1
2001.................................... --
2002.................................... --
2003.................................... --
2004.................................... --
Thereafter.............................. 1,386
------
Total long-term debt,
including current
maturities.................. $1,387
======
</TABLE>

Other Financing Arrangements

TGP is designated as a borrower under El Paso's $1,250 million, 364-day and
$750 million, five-year revolving credit facilities (collectively the "Revolving
Credit Facility"). The $1,250 million, 364-day renewable revolving credit and
competitive advance facility was established in August 1999 and replaced El
Paso's 1998 $750 million, 364-day renewable revolving credit and competitive
advance facility. The $750 million, five-year revolving credit and competitive
advance facility was established in October 1997. The rate for the Revolving
Credit Facility varies based on El Paso's unsecured debt rating. As of December
31, 1999, the interest rate for borrowings under the Revolving Credit Facility
was equal to LIBOR plus 50 basis points and no amounts were outstanding.

The availability of borrowings under the Revolving Credit Facility is
subject to specified conditions, which management believes the Company currently
meets. These conditions include compliance with the financial covenants and
ratios required by such agreements, absence of default under such agreements,
and continued accuracy of the representations and warranties contained in such
agreements (including the absence of any material adverse changes in the
Company).

In September 1998, TGP filed a shelf registration permitting it to offer up
to $600 million of debt securities. In October 1998, TGP issued $400 million
aggregate principal amount of 7% debentures due 2028. After this issuance, TGP
has $200 million of capacity remaining under its shelf registration.

6. COMMITMENTS AND CONTINGENCIES

Capital Commitments

At December 31, 1999, the Company had capital and investment commitments of
$20 million. The Company's other planned capital and investment projects are
discretionary in nature, with no substantial capital commitments made in advance
of the actual expenditures.

19
<PAGE> 23

Purchase Obligations

In connection with the financing commitments of certain joint ventures, TGP
has entered into unconditional purchase obligations for products and services
totaling $56 million at December 31, 1999. TGP's annual obligations under these
agreements are $21 million for 2000, $11 million for the year 2001, $4 million
for the years 2002, 2003, and 2004, and $12 million in total thereafter.
Excluded from these amounts is TGP's obligation to purchase 30 percent of the
output of the Great Plains coal gasification project's original design capacity
through July 2009. In January 1997, TGP settled this contract as part of its GSR
negotiations, recorded the related liability, and purchased an annuity for $42
million to fund the expected remaining monthly demand requirements of the
contract which continue through January 2004.

Guarantees

At December 31, 1999, the Company had guarantees of up to $9 million in
connection with various projects.

Rates and Regulatory Matters

The Company's interstate natural gas pipeline companies are subject to the
regulatory jurisdiction of the FERC with respect to rates, terms and conditions
of service, accounts and records, the addition of facilities, the abandonment of
services and facilities, the curtailment of gas deliveries and other matters.

In April 1997, FERC approved the settlement of all issues related to the
recovery of TGP's GSR and other transition costs and related proceedings (the
"GSR Stipulation and Agreement"). Under the terms of the GSR Stipulation and
Agreement, TGP is entitled to collect up to $770 million from its customers,
$693 million through a demand surcharge and $77 million through an interruptible
transportation surcharge. The demand portion has been fully collected. As of
December 31, 1999, $47 million of the interruptible transportation portion had
been collected. There is no time limit for collection of the interruptible
transportation surcharge. The terms of the GSR Stipulation and Agreement also
provide for a rate case moratorium through November 2000 (subject to certain
limited exceptions) and an escalating rate cap, indexed to inflation, through
October 2005, for certain of TGP's customers. TGP will be required to refund to
firm customers amounts collected in excess of each firm customer's share of the
final transition costs based on the final GSR reconciliation report, which will
be filed in March 2001. Any future refund is not expected to have a material
adverse effect on the Company's financial position, results of operations, or
cash flows.

In December 1996, TGP filed for a general rate increase with FERC and in
October 1998, FERC approved a settlement resolving that proceeding. The
settlement included a structural rate design change that resulted in a larger
portion of TGP's transportation revenues being dependent upon throughput. One
party, a competitor of TGP, filed a Petition for Review of the FERC approved
settlement with the Court of Appeals, which remanded the case to FERC to respond
to the competitor's argument that TGP's cost allocation methodology deterred the
development of market centers (centralized locations where buyers and sellers
can physically exchange gas). Comments were filed with FERC in January 1999.
This matter is still pending before FERC.

All cost of service issues related to TGP's 1991 general rate proceeding
were resolved pursuant to a settlement agreement approved by FERC which now has
become final. In a subsequent ruling, FERC remanded to an ALJ the issue of the
proper allocation of TGP's New England lateral costs. In October 1998, FERC
issued an order establishing the proper allocation of the New England lateral
costs and in April 1999, FERC denied requests for rehearing of that order. The
methodology approved by FERC economically approximates the methodology
previously used by TGP. In April 1999, TGP filed with FERC revised rates to be
effective May 1, 1999, consistent with the FERC's decision. TGP refunded
approximately $1 million to certain of its customers in the third quarter of
1999. The refunds resolved this proceeding.

In April 1999, FERC approved a settlement which resolved all outstanding
FERC proceedings relating to the cashout reports that TGP had filed for the
period September 1993 through August 1998. The settlement also established a new
cashout mechanism to account for customer imbalances. The new cashout mechanism

20
<PAGE> 24

was implemented in the second quarter of 1999, retroactive to September 1998. In
November 1999, TGP filed its first report under the settlement for the September
1998 through August 1999 period which reflected a cashout loss of approximately
$1 million. The FERC approved the cashout report in January 2000.

The TGP system has contracts covering a portion of its firm transportation
capacity which has various terms of maturity. At December 31, 1999, TGP has
contracts representing 20 percent of its firm transportation capacity expiring
by November 2000. The Company has aggressively pursued the renegotiation and
renewal of its expiring contracts, and the sale of excess capacity under firm
transportation arrangements, and has made progress in its efforts. However, it
is uncertain if future contracts will be on terms as favorable to the Company as
those that exist currently. Furthermore, new and renewed contracts can be
disputed by customers and other groups, and there is no certainty that
regulators or other jurisdictional bodies will not intercede in the
re-contracting process and alter the ultimate outcome of these efforts.

In July 1998, FERC issued a Notice of Proposed Rulemaking ("NOPR") in which
it sought comments on a wide range of initiatives to change the manner in which
short-term (less than one year) transportation markets are regulated. On
February 9, 2000, the FERC issued a final ruling in response to the NOPR. Among
other things, the rule (i) allows pipelines to file to implement peak and
off-peak rates; (ii) removes the price cap for released capacity; (iii) requires
pipelines to make changes to its tariffs regarding customer imbalances,
penalties and pipeline operations; and (iv) increases the amount and type of
information that pipelines must make available to the FERC and its customers.

As an interstate pipeline, TGP is subject to FERC audits of its books and
records. As part of an industry-wide initiative, TGP's property retirements are
currently under review by the FERC audit staff.

As the Company's rate and regulatory matters are fully and unconditionally
resolved, the Company may either recognize an additional refund obligation, a
write-down of a previously established asset, or a non-cash benefit to finalize
previously estimated liabilities. While management cannot predict with certainty
the final outcome, or timing, of the final resolution of rates and regulatory
matters, the outcome of its current re-contracting efforts, or the outcome of
industry trends and initiatives, management believes, based upon its experience
to date and after considering appropriate reserves that have been established,
that the ultimate resolution of these pending rate and regulatory matters will
not have a material adverse effect on the Company's financial position, results
of operations, or cash flows.

Legal Proceedings

In February 1998, the United States and the State of Texas filed in a
United States District Court a Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA" or "Superfund") cost recovery action
against fourteen companies including the Company and certain of its affiliated
companies relating to the Sikes Disposal Pits Superfund Site ("Sikes") located
in Harris County, Texas. The suit claims that the United States and the State of
Texas have expended over $125 million in remediating Sikes, and seeks to recover
that amount plus interest from all defendants to the suit. Although factual
investigation relating to Sikes is in the preliminary stages, the Company
believes that the amount of material, if any, disposed at Sikes by the Company
was small, possibly de minimis. However, the plaintiffs have alleged that the
defendants are each jointly and severally liable for the entire remediation
costs and have also sought a declaration of liability for future response costs
such as groundwater monitoring.

TGP is a party in proceedings involving federal and state authorities
regarding the past use by TGP of a lubricant containing PCBs in its starting air
systems. TGP has executed a consent order with the EPA governing the remediation
of certain of its compressor stations and is working with the EPA and the
relevant states regarding those remediation activities. TGP is also working with
the Pennsylvania and New York environmental agencies regarding remediation and
post-remediation activities at the Pennsylvania and New York stations.

In November 1988, the Kentucky environmental agency filed a complaint in a
Kentucky state court alleging that TGP discharged pollutants into the waters of
the state without a permit and disposed of PCBs without a permit. The agency
sought an injunction against future discharges, sought an order to remediate or

21
<PAGE> 25

remove PCBs, and sought a civil penalty. TGP has entered into agreed orders with
the agency to resolve many of the issues raised in the original allegations, has
received water discharge permits for its Kentucky compressor stations from the
agency, and continues to work to resolve the remaining issues. The relevant
Kentucky compressor stations are scheduled to be characterized and remediated
under the consent order with the EPA.

TGP has been named a defendant in actions brought by Jack Grynberg on
behalf of the U.S. Government under the False Claims Act. Generally, the
complaints allege an industry-wide conspiracy to underreport the heating value
as well as the volumes of the natural gas produced from federal and Indian
lands, thereby depriving the United States Government of royalties. The Company
believes the complaint to be without merit.

TGP has been named a defendant in a class action suit, Quinque Operating
Company v. Gas Pipelines. The Plaintiff alleges that the defendants have
mismeasured natural gas volumes and heating content of natural gas on
non-federal and non-Native American lands. This suit is similar to the action
brought by Jack Grynberg on behalf of the United States Government. The Company
believes the complaint to be without merit.

The Company is also a named defendant in numerous lawsuits and a named
party in numerous governmental proceedings arising in the ordinary course of its
business.

While the outcome of the matters discussed above cannot be predicted with
certainty, management currently does not expect the ultimate resolution of these
matters to have a material adverse effect on the Company's financial position,
its results of operations, or cash flows.

Environmental

The Company is subject to extensive federal, state, and local laws and
regulations governing environmental quality and pollution control. These laws
and regulations require the Company to remove or remedy the effect on the
environment of the disposal or release of specified substances at current and
former operating sites. As of December 31, 1999, the Company had a reserve of
approximately $107 million for expected remediation costs, including
approximately $102 million for associated onsite, offsite and groundwater
technical studies, and approximately $5 million for other costs which the
Company anticipates incurring through 2027.

In addition, the Company estimates that it will make capital expenditures
for environmental matters of approximately $3 million in 2000. Capital
expenditures are estimated to total approximately $93 million in the aggregate
for the years 2001 through 2007. These expenditures primarily relate to
compliance with air regulations and, to a lesser extent, control of water
discharges.

Since 1988, TGP has been engaged in an internal project to identify and
deal with the presence of PCBs and other substances of concern, including
substances on the EPA List of Hazardous Substances, at compressor stations and
other facilities operated by both its interstate and intrastate natural gas
pipeline systems. While conducting this project, TGP has been in frequent
contact with federal and state regulatory agencies, both through informal
negotiation and formal entry of consent orders, to ensure that its efforts meet
regulatory requirements.

In May 1995, following negotiations with its customers, TGP filed with FERC
a separate Stipulation and Agreement (the "Environmental Stipulation") that
established a mechanism for recovering a substantial portion of the
environmental costs identified in the internal project. The Environmental
Stipulation was effective July 1, 1995, and as of December 31, 1999, all amounts
have been collected thereunder. Refunds may be required to the extent actual
eligible expenditures are less than amounts collected.

TGP has been designated, has received notice that they could be designated,
or have been asked for information to determine whether they could be designated
as a PRP with respect to 3 sites under the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA or Superfund) or state equivalents. The
Company has sought to resolve its liability as a PRP with respect to these
Superfund sites

22
<PAGE> 26

through indemnification by third parties and/or settlements which provide for
payment of the Company's allocable share of remediation costs. As of December
31, 1999, the Company has estimated its share of the remediation costs at these
sites to be between $1 million and $2 million and has provided reserves that it
believes are adequate for such costs. Since the clean-up costs are estimates and
are subject to revision as more information becomes available about the extent
of remediation required, and because in some cases the Company has asserted a
defense to any liability, the Company's estimate of its share of remediation
costs could change. Moreover, liability under the federal Superfund statute is
joint and several, meaning that the Company could be required to pay in excess
of its pro rata share of remediation costs. The Company's understanding of the
financial strength of other PRPs has been considered, where appropriate, in its
determination of its estimated liability as described herein. The Company
presently believes that the costs associated with the current status of such
entities as PRPs at the Superfund sites referenced above will not have a
material adverse effect on the Company's financial position, results of
operations, or cash flows.

It is possible that new information or future developments could require
the Company to reassess its potential exposure related to environmental matters.
The Company may incur significant costs and liabilities in order to comply with
existing environmental laws and regulations. It is also possible that other
developments, such as increasingly strict environmental laws, regulations and
enforcement policies thereunder, and claims for damages to property, employees,
other persons and the environment resulting from current or discontinued
operations, could result in substantial costs and liabilities in the future. As
such information becomes available, or other relevant developments occur,
related accrual amounts will be adjusted accordingly. While there are still
uncertainties relating to the ultimate costs which may be incurred, based upon
the Company's evaluation and experience to date, the Company believes the
recorded reserves are adequate.

For a further discussion of specific environmental matters, see Legal
Proceedings above.

Management is not aware of other commitments or contingent liabilities
which could have a materially adverse effect on the Company's financial
condition, results of operations, or cash flows.

7. RETIREMENT BENEFITS

Pension and Retirement Benefits

El Paso maintains a pension plan to provide benefits determined by a cash
balance formula covering substantially all of its employees, including employees
of the Company. Also, El Paso maintains a defined contribution plan covering its
employees, including employees of the Company. El Paso matches 75 percent of
participant basic contributions of up to 6 percent, with the matching
contribution being made in El Paso stock. El Paso is responsible for benefits
accrued under its plans and allocates the related costs to its affiliates. See
Note 10 for a summary of transactions with affiliates.

Other Postretirement Benefits

Following the acquisition of EPTPC by El Paso in 1996, TGP retained
responsibility for certain postretirement medical and life insurance benefits
for its former employees and employees who were eligible to retire on December
31, 1996, and did so by July 1, 1997. Medical benefits for this closed group of
retirees are subject to deductibles, co-payment provisions, and other
limitations and dollar caps on the amount of employer costs. TGP has reserved
the right to change these benefits. Employees who retired after July 1, 1997,
will continue to receive limited postretirement life insurance benefits. Medical
benefits are prefunded to the extent such costs are recoverable through rates.
Effective February 1, 1992, TGP began recovering through its rates the other
postretirement benefits ("OPEB") costs included in the June 1993 rate case
settlement. To the extent actual OPEB costs differ from the amounts funded, a
regulatory asset or liability is recorded.

23
<PAGE> 27

The following table sets forth the change in benefit obligation, change in
plan assets, reconciliation of funded status, the components of net periodic
benefit cost, and the assumptions used in determining other postretirement
benefits as of and for the twelve month periods ended September 30:

<TABLE>
<CAPTION>
POSTRETIREMENT
BENEFITS
--------------
1999 1998
----- -----
(IN MILLIONS)
<S> <C> <C>
Change in benefit obligation
Benefit obligation at beginning of period................. $ 34 $ 40
Interest cost............................................. 2 2
Participant contributions................................. 1 1
Plan amendment............................................ -- (1)
Actuarial gain............................................ -- (5)
Benefits paid............................................. (8) (3)
---- ----
Benefit obligation at end of period....................... $ 29 $ 34
==== ====
Change in plan assets
Fair value of plan assets at beginning of period.......... $ 8 $ 7
Employer contributions.................................... 5 4
Participant contributions................................. 1 --
Benefits paid............................................. (8) (3)
---- ----
Fair value of plan assets at end of period................ $ 6 $ 8
==== ====
Reconciliation of funded status
Funded status at end of period............................ $(23) $(26)
Fourth quarter contributions.............................. 1 1
Unrecognized net actuarial gain........................... (2) (2)
Unrecognized prior service cost........................... (1) (1)
---- ----
Net accrued benefit cost at December 31,.................. $(25) $(28)
==== ====
</TABLE>

As of December 31, 1999, and 1998, the current liability portion of the
postretirement benefits was $2 million and $2 million, respectively. Benefit
obligations are based upon certain actuarial estimates as described below.

Net periodic benefit cost for the plans consisted of interest costs of $2
million, $2 million, and $3 million for the years ended December 31, 1999, 1998,
and 1997, respectively.

<TABLE>
<CAPTION>
POSTRETIREMENT
BENEFITS
---------------
1999 1998
------ ------
<S> <C> <C>
Weighted average assumptions
Discount rate............................................. 7.50% 6.75%
Expected return on plan assets............................ 7.50% 7.50%
</TABLE>

Actuarial estimates for the Company's postretirement benefits plans assumed
a weighted average annual rate of increase in the per capita costs of covered
health care benefits of 10 percent through 2000, gradually decreasing to 6
percent by the year 2008. Assumed health care cost trends have a significant
effect on the amounts reported for other postretirement benefit plans. A
one-percentage point increase or decrease in assumed health care cost trends
would have effected the aggregate of service and interest cost and the
accumulated postretirement benefit obligation by an amount less than $.5 million
for 1999 and 1998.

24
<PAGE> 28

8. SUPPLEMENTAL CASH FLOW INFORMATION

The following table contains supplemental cash flow information for the
years ended December 31:

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Interest payments........................................... $135 $178 $146
Income tax payments (refunds)............................... 2 (84) (75)
</TABLE>

9. INVESTMENT IN AFFILIATED COMPANIES (UNAUDITED)

The Company holds investments in various affiliates which are accounted for
on the equity method of accounting. The Company's principal equity method
investees are its 50 percent ownership in Bear Creek and its 19 percent
ownership in Portland.

Summarized financial information of the Company's proportionate share of 50
percent or less owned companies and majority owned unconsolidated subsidiaries
accounted for by the equity method of accounting is as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------
1999 1998 1997
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Operating results data:
Revenues and other income................................. $23 $21 $19
Costs and expenses........................................ 14 9 7
Income from continuing operations......................... 9 12 12
Net income................................................ 9 12 12
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1999 1998
----- -----
(IN MILLIONS)
<S> <C> <C>
Financial position data:
Current assets............................................ $ 26 $ 9
Non-current assets........................................ 155 144
Short-term debt........................................... 1 3
Other current liabilities................................. 3 7
Long-term debt............................................ 49 67
Other non-current liabilities............................. 5 2
Equity in net assets...................................... 123 74
</TABLE>

During 1999, El Paso formed Sabine River Investors, L.L.C., a wholly owned
limited liability company, and other separate legal entities, for the purpose of
generating funds for El Paso to invest in capital projects and other assets. The
proceeds are collateralized by certain assets of El Paso, including 100 percent
of the Company's investment in Bear Creek. At December 31, 1999, the Company's
investment in Bear Creek was $89 million.

25
<PAGE> 29

10. TRANSACTIONS WITH AFFILIATES

El Paso allocated certain general and administrative expenses to the
Company. The allocation is based on the estimated level of effort devoted to the
Company's operations and relative size based on revenues, gross property and
payroll. In 1997, the Company performed most of its own administrative
functions, and therefore, allocated general and administrative expenses were
lower.

In addition, the Company enters into transactions with other El Paso
subsidiaries and unconsolidated affiliates in the ordinary course of its
business to transport, sell and purchase natural gas. Services provided by these
affiliates for the benefit of the Company are based on the same terms as
nonaffiliates.

The following table shows revenues and charges from TGP's affiliates:

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Revenues from affiliates.................................... $ 37 $ 34 $27
Charges from affiliates..................................... 150 128 40
</TABLE>

11. SUPPLEMENTAL SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
OPERATING OPERATING NET
QUARTER REVENUES INCOME INCOME
------- --------- --------- ------
(IN MILLIONS)
<S> <C> <C> <C>
1999 1st.................................................... $187 $ 92 $ 50
2nd................................................... 175 104 58
3rd................................................... 164 68 33
4th................................................... 178 66 33
---- ---- ----
$704 $330 $174
==== ==== ====
1998 1st.................................................... $193 $ 80 $ 46
2nd................................................... 164 55 31
3rd................................................... 165 59 46
4th................................................... 177 92 86
---- ---- ----
$699 $286 $209
==== ==== ====
</TABLE>

26
<PAGE> 30

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholder of
Tennessee Gas Pipeline Company:

In our opinion, the consolidated financial statements listed in the index
appearing under Item 14.(a) 1. present fairly, in all material respects, the
consolidated financial position of Tennessee Gas Pipeline Company as of December
31, 1999 and 1998, and the consolidated results of its operations and its cash
flows for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

Houston, Texas
February 16, 2000

27
<PAGE> 31

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

Item 10, "Directors and Executive Officers of the Registrant;" Item 11,
"Executive Compensation;" Item 12, "Security Ownership of Certain Beneficial
Owners and Management;" and Item 13, "Certain Relationships and Related
Transactions;" have been omitted from this report pursuant to the reduced
disclosure format permitted by General Instruction I to Form 10-K.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A) THE FOLLOWING DOCUMENTS ARE FILED AS A PART OF THIS REPORT:

1. Financial statements.

The following consolidated and combined financial statements of the Company
are included in Part II, Item 8 of this report:

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Statements of Income...................... 9
Consolidated Balance Sheets............................ 10
Consolidated Statements of Cash Flows.................. 11
Consolidated Statements of Stockholder's Equity........ 12
Notes to Consolidated Financial Statements............. 13
Report of Independent Accountants...................... 27

2. Financial statement schedules and supplementary
information required to be submitted.

Financial statement schedules have been omitted as not
being applicable or because the subject matter is
either not present or is not present in amounts
sufficient to require submission of the schedule, in
accordance with the instructions contained in
Regulation S-X, or the required information is
included in the financial statements or notes thereto.

3. Exhibit list............................................ 29
</TABLE>

(B) REPORTS ON FORM 8-K:

None.

28
<PAGE> 32

TENNESSEE GAS PIPELINE COMPANY

EXHIBIT LIST
DECEMBER 31, 1999

Exhibits not incorporated by reference to a prior filing are designated by
an asterisk; all exhibits not so designated are incorporated herein by reference
to a prior filing as indicated.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.A -- Restated Certificate of Incorporation dated May 11, 1999
(Exhibit 3.A to TGP's Form 10-Q, filed August 12, 1999,
File No. 1-4101); Certificate of Ownership and Merger
dated as of April 12, 1996; Certificate of Amendment of
Certificate of Incorporation dated October 8, 1996
(Exhibit 3.2 to TGP's Form 10-K for 1997, File No.
1-4101).
3.A.1 -- Certificate of Ownership and Merger dated as of March 27,
1998 (Exhibit 3.A.1 to TGP's 1998 Form 10-K).
3.B -- By-laws of TGP, as amended March 1, 1998 (Exhibit 3.B to
TGP's Form 10-Q filed May 15, 1998, File No. 1-4101).
4.A -- Indenture dated as of March 4, 1997, between TGP and the
Chase Manhattan Bank (Exhibit 4.1 to EPTPC's Form 10-K
for 1997, File No. 1-9864 (the "EPTPC 1997 Form 10-K"));
First Supplemental Indenture dated as of March 13, 1997,
between TGP and The Chase Manhattan Bank (Exhibit 4.2 to
the EPTPC 1997 Form 10-K")); Second Supplemental
Indenture dated as of March 13, 1997, between TGP and The
Chase Manhattan Bank (Exhibit 4.3 to the EPTPC 1997 Form
10-K); Third Supplemental Indenture dated as of March 13,
1997, between TGP and The Chase Manhattan Bank (Exhibit
4.4 to the EPTPC 1997 Form 10-K); Fourth Supplemental
Indenture dated as of October 9, 1998, between TGP and
The Chase Manhattan Bank (Exhibit 4.2 to TGP's Form 8-K
filed October 9, 1998, File No. 1-4101).
10.A -- $1,250,000,000 364-Day Revolving Credit and Competitive
Advance Facility Agreement dated as of August 16, 1999,
by and among El Paso, EPNG, TGP, the several banks and
other financial institutions from time to time parties to
the Agreement, The Chase Manhattan Bank, as
administrative agent and as Competitive Advance Facility
Advance Agent for the Lenders thereunder, Citibank N.A.
and ABN Amro Bank, N.V. as co-documentation agents for
the Lenders and Bank of America, N.A. as syndication
agent for the Lenders. (Exhibit 10.A to TGP's Form 10-Q
filed November 15, 1999, File No. 1-4101).
10.B -- $750 million 5-Year Revolving Credit and Competitive
Advance Facility Agreement dated as of October 29, 1997,
by and among EPNG, TGP, The Chase Manhattan Bank,
Citibank, N.A., Morgan Guaranty Trust Company of New
York, and certain other banks (Exhibit 10.D to El Paso's
Form 10-Q filed November 12, 1998, File No. 1-4101 (the
"El Paso 1998 Third Quarter 10-Q")); First Amendment to
the $750 million 5-Year Revolving Credit and Competitive
Advance Facility dated as of October 9, 1998, by and
among EPNG, TGP, The Chase Manhattan Bank, Citibank,
N.A., Morgan Guaranty Trust Company of New York, and
certain other banks (Exhibit 10.E to the El Paso 1998
Third Quarter 10-Q).
21 -- Omitted pursuant to the reduced disclosure format
permitted by General Instruction I to Form 10-K.
*23 -- Consent of Independent Accountants.
*27 -- Financial Data Schedule.
</TABLE>

UNDERTAKING

The undersigned Registrant hereby undertakes, pursuant to Regulation S-K,
Item 601(b), paragraph (4)(iii), to furnish to the Securities and Exchange
Commission upon request all constituent instruments defining the rights of
holders of long-term debt of Registrant and its consolidated subsidiaries not
filed herewith for the reason that the total amount of securities authorized
under any of such instruments does not exceed 10 percent of the total
consolidated assets of Registrant and its consolidated subsidiaries.

29
<PAGE> 33

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, Tennessee Gas Pipeline Company has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized on the 10th day of March 2000.

TENNESSEE GAS PIPELINE COMPANY
Registrant

By: /s/ JOHN W. SOMERHALDER II
----------------------------------
John W. Somerhalder II
Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
Tennessee Gas Pipeline Company and in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN W. SOMERHALDER II Chairman of the Board and March 10, 2000
- ----------------------------------------------------- Director
(John W. Somerhalder II)

/s/ STEPHEN C. BEASLEY President and Director March 10, 2000
- -----------------------------------------------------
(Stephen C. Beasley)

/s/ H. BRENT AUSTIN Executive Vice President, March 10, 2000
- ----------------------------------------------------- Chief Financial Officer and
(H. Brent Austin) Director

/s/ JEFFREY I. BEASON Senior Vice President and March 10, 2000
- ----------------------------------------------------- Controller (Chief Accounting
(Jeffrey I. Beason) Officer)
</TABLE>

30
<PAGE> 34

INDEX TO EXHIBITS

Exhibits not incorporated by reference to a prior filing are designated by
an asterisk, all exhibits not so designated are incorporated herein by reference
to a prior filing as indicated.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.A -- Restated Certificate of Incorporation dated May 11, 1999
(Exhibit 3.A to TGP's Form 10-Q, filed August 12, 1999,
File No. 1-4101); Certificate of Ownership and Merger
dated as of April 12, 1996; Certificate of Amendment of
Certificate of Incorporation dated October 8, 1996
(Exhibit 3.2 to TGP's Form 10-K for 1997, File No.
1-4101).
3.A.1 -- Certificate of Ownership and Merger dated as of March 27,
1998 (Exhibit 3.A.1 to TGP's 1998 Form 10-K).
3.B -- By-laws of TGP, as amended March 1, 1998 (Exhibit 3.B to
TGP's Form 10-Q filed May 15, 1998, File No. 1-4101).
4.A -- Indenture dated as of March 4, 1997, between TGP and the
Chase Manhattan Bank (Exhibit 4.1 to EPTPC's Form 10-K
for 1997, File No. 1-9864 (the "EPTPC 1997 Form 10-K"));
First Supplemental Indenture dated as of March 13, 1997,
between TGP and The Chase Manhattan Bank (Exhibit 4.2 to
the EPTPC 1997 Form 10-K); Second Supplemental Indenture
dated as of March 13, 1997, between TGP and The Chase
Manhattan Bank (Exhibit 4.3 to the EPTPC 1997 Form 10-K);
Third Supplemental Indenture dated as of March 13, 1997,
between TGP and The Chase Manhattan Bank (Exhibit 4.4 to
the EPTPC 1997 Form 10-K); Fourth Supplemental Indenture
dated as of October 9, 1998, between TGP and The Chase
Manhattan Bank (Exhibit 4.2 to TGP's Form 8-K filed
October 9, 1998, File No. 1-4101).
10.A -- $1,250,000,000 364-Day Revolving Credit and Competitive
Advance Facility Agreement dated as of August 16, 1999,
by and among El Paso, EPNG, TGP, the several banks and
other financial institutions from time to time parties to
the Agreement, The Chase Manhattan Bank, as
administrative agent and as Competitive Advance Facility
Advance Agent for the Lenders thereunder, Citibank N.A.
and ABN Amro Bank, N.V. as co-documentation agents for
the Lenders and Bank of America, N.A. as syndication
agent for the Lenders. (Exhibit 10.A to TGP's Form 10-Q
filed November 15, 1999, File No. 1-4101).
10.B -- $750 million 5-Year Revolving Credit and Competitive
Advance Facility Agreement dated as of October 29, 1997,
by and among EPNG, TGP, The Chase Manhattan Bank,
Citibank, N.A., Morgan Guaranty Trust Company of New
York, and certain other banks (Exhibit 10.D to El Paso's
Form 10-Q filed November 12, 1998, File No. 1-4101 (the
"El Paso 1998 Third Quarter 10-Q")); First Amendment to
the $750 million 5-Year Revolving Credit and Competitive
Advance Facility dated as of October 9, 1998, by and
among EPNG, TGP, The Chase Manhattan Bank, Citibank,
N.A., Morgan Guaranty Trust Company of New York, and
certain other banks (Exhibit 10.E to the El Paso 1998
Third Quarter 10-Q).
21 -- Omitted pursuant to the reduced disclosure format
permitted by General Instruction I to Form 10-K.
*23 -- Consent of Independent Accountants.
*27 -- Financial Data Schedule.
</TABLE>

<PAGE> 1

EXHIBIT 23

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the registration statement
of Tennessee Gas Pipeline Company (the "Company") on Form S-3 (File No.
333-63429) of our report dated February 16, 2000, on our audits of the
consolidated financial statements of the Company as of December 31, 1999 and
1998, and for the years ended December 31, 1999, 1998 and 1997, which report is
included in this Annual Report on Form 10-K.

PricewaterhouseCoopers LLP

Houston, Texas
March 10, 2000

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
STATEMENTS OF INCOME AND CONSOLIDATED BALANCE SHEETS.
</LEGEND>
<MULTIPLIER> 1,000,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 4
<SECURITIES> 0
<RECEIVABLES> 624
<ALLOWANCES> 0<F1>
<INVENTORY> 0
<CURRENT-ASSETS> 707
<PP&E> 4,488
<DEPRECIATION> 0<F1>
<TOTAL-ASSETS> 5,421
<CURRENT-LIABILITIES> 1,056
<BONDS> 1,353
0
0
<COMMON> 0
<OTHER-SE> 1,562
<TOTAL-LIABILITY-AND-EQUITY> 5,421
<SALES> 0
<TOTAL-REVENUES> 704
<CGS> 0
<TOTAL-COSTS> 374
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 96
<INCOME-PRETAX> 256
<INCOME-TAX> 82
<INCOME-CONTINUING> 174
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 174
<EPS-BASIC> 0
<EPS-DILUTED> 0
<FN>
<F1>Not separately identified in the consolidated financial statements or
accompanying notes thereto.
</FN>

</TABLE>