General

We are a publicly traded Delaware limited liability company, formed on February 14, 2001, that has elected to be treated as a corporation for federal income tax purposes. Our voting shares are owned by Kinder Morgan G.P., Inc., of which Knight Inc. owns all the outstanding common equity. Kinder Morgan G.P., Inc. is the general partner of Kinder Morgan Energy Partners, L.P.

Business

Kinder Morgan G.P., Inc. has delegated to us, to the fullest extent permitted under Delaware law and Kinder Morgan Energy Partners, L.P.'s limited partnership agreement, all of its rights and powers to manage and control the business and affairs of Kinder Morgan Energy Partners, L.P., subject to the general partner's right to approve specified actions.

Financial Condition

As indicated by the accompanying interim Consolidated Balance Sheets, there has been no material change in our financial condition during the current quarter.

Results of Operations

Our results of operations consist of the offsetting expenses and receipts associated with our managing and controlling the business and affairs of Kinder Morgan Energy Partners, L.P. and our equity in the earnings of Kinder Morgan Energy Partners, L.P. attributable to the i-units we own. At June 30, 2008, through our ownership of i-units, we owned approximately 29.1% of all of Kinder Morgan Energy Partners, L.P.'s outstanding limited partner interests. We use the equity method of accounting for our investment in Kinder Morgan Energy Partners, L.P. and we record earnings as described below. Our percentage ownership in Kinder Morgan Energy Partners, L.P. changes over time upon the distribution of additional i-units to us or upon issuances of additional common units or other equity securities by Kinder Morgan Energy Partners, L.P.

Our earnings, as reported in the accompanying interim Consolidated Statements of Operations, represent equity in earnings of Kinder Morgan Energy Partners, L.P. attributable to the i-units we own, reduced by a deferred income tax provision and adjusted for the push down effect of Knight Inc.'s purchase of us and Kinder Morgan Energy Partners, L.P. The deferred income tax provision is calculated based on the book/tax basis difference created by our recognition, under accounting principles generally accepted in the United States of America, of our share of the earnings of Kinder Morgan Energy Partners, L.P. Our earnings per share (both basic and diluted) is our net income divided by our weighted-average number of outstanding shares during each period presented. There are no securities outstanding that may be converted into or exercised for our shares.

Upon the implementation of Emerging Issues Task Force Issue No. 04-5, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights, effective January 1, 2006, Knight Inc., our parent, no longer accounted for its investment in Kinder Morgan Energy Partners, L.P. under the equity method of accounting, but instead included the accounts, balances and results of operations of Kinder Morgan Energy Partners, L.P. in its consolidated financial statements. This resulted in Knight Inc. and Kinder Morgan Energy Partners, L.P. being entities under common control.

Our results for the three and six months ended June 30, 2008 are affected by the push-down of the application of the purchase method of accounting related to the May 30, 2007 Going Private transaction of Knight Inc., as discussed in Knight Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008. The impact of this push down is immaterial to our results of operations and therefore the following discussion is based on the results for the three and six months ended June 30, 2008 and 2007, rather than the pre-acquisition and post-acquisition periods.

For the three and six months ended June 30, 2008, Kinder Morgan Energy Partners, L.P. reported limited partners' interest in net income of $166.3 million and $325.6 million, respectively. For the three and six months ended June 30, 2007, Kinder Morgan Energy Partners, L.P. reported limited partners' interest in net income (loss) of $84.5 million and $(201.1 million), respectively. The reported segment earnings contribution by business segment, restated for the three and six months ended June 30, 2007, for Kinder Morgan Energy Partners, L.P. is set forth below. This information should be read in conjunction with Kinder Morgan Energy Partners, L.P.'s Annual Report on Form 10-K for the year ended December 31, 2007 and with its Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.

                                         Kinder Morgan Management, LLC Form 10-Q

                      Kinder Morgan Energy Partners, L.P.

                                 Three Months Ended          Six Months Ended
                                      June 30,                   June 30,
                                 2008          2007         2008          2007
                                                 (In millions)
Segment Earnings Before
Depreciation, Amortization
and Amortization of Excess
Cost of Equity Investments:1
Product Pipelines              $  137.6     $  147.6     $   278.3     $  290.8
Natural Gas Pipelines             182.5        144.6         370.7        279.3
CO2                               216.6        128.9         416.4        254.3
Terminals                         140.4        110.1         266.2        210.6
Trans Mountain2                    33.4         29.6          63.6       (328.6 )
Total Segment Earnings Before
DD&A                              710.5        560.8       1,395.2        706.4
Total Segment Depreciation,
Depletion and Amortization       (165.6 )     (135.8 )      (323.7 )     (268.5 )
Total Segment Amortization of
Excess Cost of Investments         (1.5 )       (1.5 )        (2.9 )       (2.9 )
Interest and Corporate                  )            )                          )
Administrative Expenses3         (181.2       (190.8        (359.7 )     (351.8
Total Consolidated Net
Income4                        $  362.2     $  232.7     $   708.9     $   83.2


____________

2 Six Months 2007 amount includes a $377.1 million goodwill impairment expense.

3 Includes unallocated interest income and income tax expense, interest and debt expense, general and administrative expenses (including unallocated litigation and environmental expenses) and minority interest expense.

4 Includes general partner's interest in net income of $195.9 million and $383.3 million for the three and six months ended June 30, 2008, respectively, and limited partners' interest in net income of $166.3 million and $325.6 million for the same respective periods in 2008. Includes general partner's interest in net income of $148.2 million and $284.3 million for the three and six months ended June 30, 2007, respectively, and limited partners' interest in net income
(loss) of $84.5 million and $(201.1 million) for the three and six months ended June 30, 2007, respectively.

Income Taxes

We are a limited liability company that has elected to be treated as a
corporation for federal income tax purposes.

Income taxes included in our statement of operations were as follows:

                                        Three Months Ended         Six Months Ended
                                             June 30,                  June 30,
                                         2008          2007        2008        2007
                                                   (Dollars in millions)
        Income Tax Expense (Benefit)  $   17.6       $  8.8      $  42.0     $ (19.2 )
        Effective Tax Rate                37.1 %       36.2 %       44.7 %      36.1 %

For the three month period ended June 30, 2008, and the three and six months ended June 30, 2007, our effective tax rate was higher than the statutory federal income tax rate of 35% primarily due to state income taxes. During the six months ended June 30, 2008 our effective tax rate was higher than the statutory federal income tax rate due to both state income taxes and the out of period adjustment described in Note 9 of the accompanying Notes to Consolidated Financial Statements.

Liquidity and Capital Resources

Our authorized capital structure consists of two classes of interests: (1) our listed shares and (2) our voting shares, collectively referred to in this document as our "shares." Additional classes of interests may be approved by our board and holders of a majority of our shares, excluding shares held by Knight Inc. and its affiliates. The number of our shares outstanding will at all times equal the number of i-units of Kinder Morgan Energy Partners, L.P., all of which we own. Under the terms of our limited liability company agreement, except in connection with our liquidation, we do not pay distributions on our shares in cash but we make distributions on our shares in additional shares or fractions of shares. At the same time

Kinder Morgan Energy Partners, L.P. makes a distribution on its common units and i-units, we distribute on each of our shares that fraction of a share determined by dividing the amount of the cash distribution to be made by Kinder Morgan Energy Partners, L.P. on each common unit by the average market price of a share determined for a ten-trading day period ending on the trading day immediately prior to the ex-dividend date for our shares.

On May 15, 2008, we paid a share distribution of 0.017716 shares per outstanding share (1,305,429 total shares) to shareholders of record as of April 30, 2008, based on the $0.96 per common unit distribution declared by Kinder Morgan Energy Partners, L.P. On August 14, 2008, we will pay a share distribution of .018124 shares per outstanding share (1,359,152 total shares) to shareholders of record as of July 31, 2008, based on the $0.99 per common unit distribution declared by Kinder Morgan Energy Partners, L.P.

We expect that our expenditures associated with managing and controlling the business and affairs of Kinder Morgan Energy Partners, L.P. and the reimbursement for these expenditures received by us from Kinder Morgan Energy Partners, L.P. will continue to be equal. As stated above, the distributions we expect to receive on the i-units we own will be in the form of additional i-units. Therefore, we expect neither to generate nor to require significant amounts of cash in ongoing operations. We currently have no debt and have no plans to incur any debt. Any cash received from the sale of additional shares will immediately be used to purchase additional i-units. Accordingly, we do not anticipate any other sources or needs for additional liquidity.

Recent Accounting Pronouncements

Refer to Note 10 of the accompanying Notes to Consolidated Financial Statements for information regarding recent accounting pronouncements.

Information Regarding Forward-looking Statements

This filing includes forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. They use words such as "anticipate," "believe," "intend," "plan," "projection," "forecast," "strategy," "position," "continue," "estimate," "expect," "may," or the negative of those terms or other variations of them or comparable terminology. In particular, statements, express or implied, concerning future actions, conditions or events, future operating results or the ability to generate sales, income or cash flow or to pay dividends or make distributions are forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future actions, conditions or events and future results of our operations and those of Kinder Morgan Energy Partners, L.P. may differ materially from those expressed in these forward-looking statements. Please see "Information Regarding Forward-Looking Statements" for Kinder Morgan Energy Partners, L.P. included in Kinder Morgan Energy Partners, L.P.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008. Many of the factors that will determine these results are beyond our ability to control or predict. Specific factors that could cause actual results to differ from those in the forward-looking statements include:

· price trends and overall demand for natural gas liquids, refined petroleum products, oil, carbon dioxide, natural gas, electricity, coal and other bulk materials and chemicals in North America;

· economic activity, weather, alternative energy sources, conservation and technological advances that may affect price trends and demand;

· changes in tariff rates charged by Kinder Morgan Energy Partners, L.P.'s pipeline subsidiaries implemented by the Federal Energy Regulatory Commission, Canada's National Energy Board, the California Public Utilities Commission or other regulatory agencies;

· Kinder Morgan Energy Partners, L.P.'s ability to acquire new businesses and assets and integrate those operations into its existing operations, as well as its ability to expand Kinder Morgan Energy Partners, L.P.'s facilities;

· difficulties or delays experienced by railroads, barges, trucks, ships or pipelines in delivering products to or from Kinder Morgan Energy Partners, L.P.'s terminals or pipelines;

· Kinder Morgan Energy Partners, L.P.'s ability to successfully identify and close acquisitions and make cost-saving changes in operations;

· shut-downs or cutbacks at major refineries, petrochemical or chemical plants, ports, utilities, military bases or other businesses that use Kinder Morgan Energy Partners, L.P.'s services or provide services or products to it;

· crude oil and natural gas production from exploration and production areas that Kinder Morgan Energy Partners, L.P. serves, such as the Permian Basin area of West Texas, the U.S. Rocky Mountains and the Alberta oilsands;

· changes in laws or regulations, third-party relations and approvals and decisions of courts, regulators and governmental bodies that may adversely affect Kinder Morgan Energy Partners, L.P.'s ability to compete;

· changes in accounting pronouncements that impact the measurement of Kinder Morgan Energy Partners, L.P.'s results of operations, the timing of when such measurements are to be made and recorded, and the disclosures surrounding these activities;

· Kinder Morgan Energy Partners, L.P.'s ability to offer and sell equity securities and debt securities or obtain debt financing in sufficient amounts to implement that portion of Kinder Morgan Energy Partners, L.P.'s business plan that contemplates growth through acquisitions of operating businesses and assets and expansions of its facilities;

· Kinder Morgan Energy Partners, L.P.'s indebtedness, which could make it vulnerable to general adverse economic and industry conditions, limit its ability to borrow additional funds and/or place it at competitive disadvantages compared to its competitors that have less debt or have other adverse consequences;

· interruptions of electric power supply to Kinder Morgan Energy Partners, L.P.'s facilities due to natural disasters, power shortages, strikes, riots, terrorism, war or other causes;

· Kinder Morgan Energy Partners, L.P.'s ability to obtain insurance coverage without significant levels of self-retention of risk;

· acts of nature, sabotage, terrorism or other similar acts causing damage greater than Kinder Morgan Energy Partners, L.P.'s insurance coverage limits;

· capital markets conditions, inflation and interest rates;

· the political and economic stability of the oil producing nations of the world;

· national, international, regional and local economic, competitive and regulatory conditions and developments;

· Kinder Morgan Energy Partners, L.P.'s ability to achieve cost savings and revenue growth;

· foreign exchange fluctuations;

· the timing and extent of changes in commodity prices for oil, natural gas, electricity and certain agricultural products;

· the extent of Kinder Morgan Energy Partners, L.P.'s success in discovering, developing and producing oil and gas reserves, including the risks inherent in exploration and development drilling, well completion and other development activities;

· engineering and mechanical or technological difficulties that Kinder Morgan Energy Partners, L.P. may experience with operational equipment, in well completions and workovers, and in drilling new wells;

· the uncertainty inherent in estimating future oil and natural gas production or reserves that Kinder Morgan Energy Partners, L.P., L.P. may experience;

· the ability to complete expansion projects on time and on budget;

· the timing and success of Kinder Morgan Energy Partners, L.P.'s business development efforts; and

· unfavorable results of litigation involving Kinder Morgan Energy Partners, L.P. and the fruition of contingencies referred to in Kinder Morgan Energy Partners, L.P.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.

There is no assurance that any of the actions, events or results of the forward-looking statements will occur, or if any of them do, what impact they will have on our results of operations or financial condition. Because of these uncertainties, you should not put undue reliance on any forward-looking statements.

See Item 1A "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2007 and Item 1A "Risk Factors" in Part II of this report, for a more detailed description of these and other factors that may affect the forward-looking statements. When considering forward-looking statements, one should keep in mind the risk factors described in our 2007 Form 10-K report and this report and in Kinder Morgan Energy Partners, L.P.'s Annual Report on Form 10-K for the year ended December 31, 2007. The risk factors could cause our actual results to differ materially from those contained in any forward-looking statement. We disclaim any obligation, other than as required by applicable law, to update the above list or to announce publicly the result of any revisions to any of the forward-looking statements to reflect future events or developments.