|ENTERPRISE PRODUCTS PARTNERS L P filed this Form 10-K on 02/28/2018|
Interest expense for 2016 increased $20.8 million when compared to 2015. The following table presents the components of our consolidated interest expense for the years indicated (dollars in millions):
Interest charged on debt principal outstanding, which is the primary driver of interest expense, increased a net $25.5 million year-to-year primarily due to increased debt principal amounts outstanding during 2016, which accounted for a $54.8 million increase, partially offset by the effect of lower overall interest rates in 2016, which accounted for a $29.3 million decrease. Our weighted-average debt principal balance for 2016 was $23.41 billion compared to $22.24 billion for 2015.
Change in fair market value of Liquidity Option Agreement
We recognized a decrease of $0.9 million of aggregate non-cash expense attributable to accretion and changes in management estimates regarding inputs to the valuation model for the Liquidity Option Agreement.
Income taxes primarily reflects our state tax obligations under the Texas Margin Tax. Our provision for income taxes for 2016 increased $25.9 million when compared to 2015 primarily due to an increase in accruals for the Texas Margin Tax. In June 2015, the State of Texas lowered the tax rate under the Texas Margin Tax, which resulted in an income tax benefit for us in 2015.
Business Segment Highlights
We evaluate segment performance based on our financial measure of gross operating margin. Gross operating margin is an important performance measure of the core profitability of our operations and forms the basis of our internal financial reporting. We believe that investors benefit from having access to the same financial measures that our management uses in evaluating segment results.
The following table presents gross operating margin by segment and non-GAAP total gross operating margin for the periods indicated (dollars in millions):