March 2010 Letter to Unitholders

2009 was another difficult year for many, and while we certainly had our share of challenges at Kinder Morgan Energy Partners (NYSE: KMP), I’m delighted to report that we were able to generate enough cash flow to cover our annual distribution target of $4.20 per unit and end the year with excess coverage of $14 million. The $4.20 per unit distribution represents a 4.5 percent increase over our 2008 distribution of $4.02 per unit. More importantly to you, our unitholders, KMP returned 45 percent to its limited partners in 2009 and has delivered a compound annual return of 27 percent since KMP was founded in early 1997.

Our businesses were impacted by various economic headwinds during 2009, including lower refined products transportation volumes, decreased steel handling at our bulk terminals, lower crude oil prices and a difficult business environment for our Texas Intrastate Pipelines. We were able to overcome these headwinds by exceeding expectations at some of our other assets, reducing internal costs and benefiting from lower interest rates. Also in 2009, we maintained a strong balance sheet and continued to have excellent access to the capital markets.

KMP has been described by some analysts and media as a resilient company that produces solid results in all types of market conditions. How have we accomplished that? First, we have a large, diversified portfolio of assets that produce tremendous amounts of stable cash flow. Second, we have an experienced management team with a proven track record. And third, we have outstanding employees. Considering the challenges that we faced in 2009, what our 8,000 employees were able to accomplish was truly exceptional and I salute them for their commitment and tireless efforts.

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