TRANSACTIONS WITH MAJOR CUSTOMERS AND AFFILIATES

Concentration of Off-Balance-Sheet and Other Credit Risk

During the periods presented, more than 10 percent of our operating revenues were generated from each of the following customers:



	Years Ended December 31,
	2014		2013		2012
	(Thousands of Dollars)
Puget Sound Energy, Inc.	$	113,398	$	110,111	$	100,799
Northwest Natural Gas Company	50,631		51,085		42,297

Our major customers are located in the Pacific Northwest. As a general policy, collateral is not required for receivables, but customers’ financial condition and credit worthiness are regularly evaluated and historical collection losses have been minimal.

Related Party Transactions

We are a participant in WPZ’s cash management program. At December 31, 2014 and 2013, the advances due to us by WPZ totaled approximately $135.1 million and $119.2 million, respectively. These advances are represented by demand notes and are classified as Current Assets in the accompanying Balance Sheet. The interest rate on these intercompany demand notes is based upon the daily overnight investment rate paid on WPZ’s excess cash at the end of each month, which was approximately 0.01 percent at December 31, 2014. The interest income from these advances was minimal during the years ended December 31, 2014, 2013, and 2012. Such interest income is included in Other (Income) and Other Expenses: Miscellaneous other expenses, net on the accompanying Statement of Comprehensive Income.

We have no employees. Services necessary to operate our business are provided to us by Williams and certain affiliates of Williams. We reimburse Williams and its affiliates for all direct and indirect expenses incurred or payments made (including salary, bonus, incentive compensation, and benefits) in connection with these services. Employees of Williams also provide general administrative and management services to us, and we are charged for certain administrative expenses incurred by Williams. These charges are either directly identifiable or allocated to our assets. Direct charges are for goods and services provided by Williams at our request. Allocated charges are based on a three factor formula, which considers revenues; property, plant, and equipment; and payroll. In management’s estimation, the allocation methodologies used are reasonable and result in a reasonable allocation to us of our costs of doing business incurred by Williams. We were billed $102.4 million, $106.7 million, and $113.0 million in the years ended December 31, 2014, 2013, and 2012, respectively, for these services. Such expenses are primarily included in General and administrative and Operation and maintenance expenses on the accompanying Statement of Comprehensive Income.

In 2014 and 2013, we incurred reimbursable costs of $27.3 million and $89.8 million, respectively, due from Williams Field Services related to the construction of a natural gas liquids pipeline, of which $0.5 million and $38.6 million was outstanding at December 31, 2014 and 2013, respectively.

During 2014, 2013, and 2012, we declared and paid cash distributions to our parent of $234.0 million, $91.0 million, and $137.5 million, respectively. During January 2015, we declared and paid cash distributions of $58.0 million to our parent.

During 2013, and 2012, we received contributions of $13.3 million, and $8.6 million from our parent to fund a portion of our expenditures for additions to property, plant, and equipment. No contributions were received in 2014.

We have entered into various other transactions with certain related parties, the amounts of which were not significant. These transactions and the above-described transactions are made on the basis of commercial relationships and prevailing market prices or general industry practices.