2. REVENUE FROM CONTRACTS WITH CUSTOMERS
The following table summarizes revenue from contracts with customers:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | Year Ended December 31, | |
| | | | | | | |
| thousands | | | | | | 2025 | | 2024 | | 2023 | |
| Revenue from customers | | | | | | | | | | | |
| Service revenues – fee based | | | | | | $ | 3,453,052 | | | $ | 3,248,262 | | | $ | 2,768,757 | | |
| Service revenues – product based | | | | | | 193,866 | | | 215,776 | | | 191,727 | | |
| Product sales | | | | | | 194,681 | | | 140,100 | | 145,024 | |
| Total revenue from customers | | | | | | 3,841,599 | | | 3,604,138 | | 3,105,508 | |
| Revenue from other than customers | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Other | | | | | | 1,804 | | | 1,085 | | | 968 | | |
| Total revenues and other | | | | | | $ | 3,843,403 | | | $ | 3,605,223 | | | $ | 3,106,476 | | |
Contract balances. Receivables from customers, which are included in Accounts receivable, net on the consolidated balance sheets, were $737.0 million and $693.9 million as of December 31, 2025 and 2024, respectively.
Contract assets primarily relate to (i) revenue accrued but not yet billed under cost-of-service contracts with fixed and variable fees and (ii) accrued deficiency fees the Partnership expects to charge customers once the related performance periods are completed. The following table summarizes activity related to contract assets from contracts with customers:
| | | | | | | | | | | | | | | |
| | | | | |
| | Year Ended December 31, | |
| thousands | | 2025 | | 2024 | |
| | | | | |
| Contract assets balance at beginning of year | | $ | 43,186 | | | $ | 39,292 | | |
| Amounts transferred to Accounts receivable, net that were included in the contract assets balance at the beginning of the period | | (14,055) | | | (7,479) | | |
| Additional estimated revenues recognized | | 8,117 | | | 3,195 | | |
| Cumulative catch-up adjustment for change in estimated consideration | | (26,733) | | | 8,178 | | |
| Contract assets balance at end of year | | $ | 10,515 | | | $ | 43,186 | | |
| | | | | | |
| | December 31, | |
| thousands | | 2025 | | 2024 | |
| | | | | |
| Other current assets | | $ | 3,386 | | | $ | 12,358 | | |
| Other assets | | 7,129 | | | 30,828 | | |
| Total contract assets from contracts with customers | | $ | 10,515 | | | $ | 43,186 | | |
2. REVENUE FROM CONTRACTS WITH CUSTOMERS
Contract liabilities primarily relate to (i) fixed and variable fees under cost-of-service contracts that are received from customers for which revenue recognition is deferred, (ii) aid-in-construction payments received from customers that must be recognized over the expected period of customer benefit, and (iii) fees that are charged to customers for only a portion of the contract term and must be recognized as revenues over the expected period of customer benefit.
The following table summarizes activity related to contract liabilities from contracts with customers:
| | | | | | | | | | | | | | | |
| | | | | |
| | Year Ended December 31, | |
| thousands | | 2025 | | 2024 | |
| | | | | |
| Contract liabilities balance at beginning of year | | $ | 610,571 | | | $ | 445,499 | | |
| Cash received or receivable, excluding revenues recognized during the period | | 161,213 | | | 193,360 | | |
| Revenues recognized that were included in the contract liability balance at the beginning of the period | | (4,676) | | | (28,288) | | |
| Cumulative catch-up adjustment for change in estimated consideration | | 40 | | | — | | |
| | | | | |
| Contract liabilities balance at end of year | | $ | 767,148 | | | $ | 610,571 | | |
| | | | | | |
| | December 31, | |
| thousands | | 2025 | | 2024 | |
| | | | | |
| Accrued liabilities | | $ | 22,883 | | | $ | 11,055 | | |
| Other liabilities | | 744,265 | | | 599,516 | | |
| Total contract liabilities from contracts with customers | | $ | 767,148 | | | $ | 610,571 | | |
Transaction price allocated to remaining performance obligations. Revenues expected to be recognized from certain performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2025, are presented in the table below. The Partnership applies the optional exemptions in Revenue from Contracts with Customers (Topic 606) and does not disclose consideration for remaining performance obligations with an original expected duration of one year or less or for variable consideration related to unsatisfied (or partially unsatisfied) performance obligations. Therefore, the following table represents only a portion of expected future revenues from existing contracts, as most future revenues from customers are dependent on future variable customer volumes and, in some cases, variable commodity prices for those volumes. See Note 18.
| | | | | | | | | |
| thousands | | | |
| 2026 | | $ | 1,110,784 | | |
| 2027 | | 1,167,371 | | |
| 2028 | | 1,007,267 | | |
| 2029 | | 697,968 | | |
| 2030 | | 552,690 | | |
| Thereafter | | 2,058,156 | | |
| Total | | $ | 6,594,236 | | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.