þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE | 26-1157701 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
295 Chipeta Way Salt Lake City, Utah | 84108 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer ¨ | Accelerated filer ¨ | Non-accelerated filer þ | Smaller reporting company ¨ | Emerging growth company ¨ | ||||
(Do not check if a smaller reporting company) |
Page | |
Balance Sheet — June 30, 2017 and December 31, 2016 | |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | |
• | Our and our affiliates' future credit ratings; |
• | Amounts and nature of future capital expenditures; |
• | Expansion and growth of our business and operations; |
• | Expected in service dates for capital projects; |
• | Financial condition and liquidity; |
• | Business strategy; |
• | Cash flow from operations or results of operations; |
• | Rate case filings; |
• | Natural gas prices, supply, and demand; and |
• | Demand for our services. |
• | Availability of supplies, including lower than anticipated volumes from third parties, and market demand; |
• | Volatility of pricing including the effect of lower than anticipated energy commodity prices and margins; |
• | Inflation, interest rates, and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on our customers and suppliers); |
• | The strength and financial resources of our competitors and the effects of competition; |
• | Whether we are able to successfully identify, evaluate and timely execute our capital projects and other investment opportunities in accordance with our capital expenditure budget; |
• | Whether Williams will be able to effectively manage the transition in its board of directors and management as well as successfully execute its business restructuring; |
• | Our ability to successfully expand our facilities and operations; |
• | Development and rate of adoption of alternative energy sources; |
• | The impact of operational and development hazards, unforeseen interruptions, and the availability of adequate insurance coverage for such interruptions; |
• | The impact of existing and future laws, regulations, the regulatory environment, environmental liabilities, and litigation, as well as our ability to obtain permits and achieve favorable rate proceeding outcomes; |
• | Our costs for defined benefit pension plans and other postretirement benefit plans sponsored by our affiliates; |
• | Changes in maintenance and construction costs; |
• | Changes in the current geopolitical situation; |
• | Our exposure to the credit risks of our customers and counterparties; |
• | Risks related to financing, including restrictions stemming from our debt agreements, future changes in our credit ratings and the availability and cost of capital; |
• | Risks associated with weather and natural phenomena, including climate conditions and physical damage to our facilities; |
• | Acts of terrorism, including cybersecurity threats, and related disruptions; and |
• | Additional risks described in our filings with the Securities and Exchange Commission (SEC). |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
OPERATING REVENUES | $ | 115,094 | $ | 115,569 | $ | 235,594 | $ | 236,017 | ||||||||
OPERATING EXPENSES: | ||||||||||||||||
General and administrative | 13,421 | 13,038 | 27,502 | 26,865 | ||||||||||||
Operation and maintenance | 19,125 | 21,231 | 34,522 | 38,483 | ||||||||||||
Depreciation | 25,313 | 25,414 | 50,829 | 50,729 | ||||||||||||
Regulatory debits | 1,213 | 871 | 2,461 | 1,720 | ||||||||||||
Taxes, other than income taxes | 4,206 | 4,312 | 8,987 | 8,664 | ||||||||||||
Total operating expenses | 63,278 | 64,866 | 124,301 | 126,461 | ||||||||||||
OPERATING INCOME | 51,816 | 50,703 | 111,293 | 109,556 | ||||||||||||
OTHER (INCOME) AND OTHER EXPENSES: | ||||||||||||||||
Interest expense | 8,448 | 10,952 | 16,811 | 22,429 | ||||||||||||
Allowance for equity and borrowed funds used during construction | (362 | ) | (242 | ) | (512 | ) | (625 | ) | ||||||||
Miscellaneous other (income) expenses, net | 98 | 31 | 213 | 669 | ||||||||||||
Total other (income) and other expenses | 8,184 | 10,741 | 16,512 | 22,473 | ||||||||||||
NET INCOME | 43,632 | 39,962 | 94,781 | 87,083 | ||||||||||||
CASH FLOW HEDGES: | ||||||||||||||||
Amortization of cash flow hedges into Interest expense | — | (13 | ) | — | (28 | ) | ||||||||||
COMPREHENSIVE INCOME | $ | 43,632 | $ | 39,949 | $ | 94,781 | $ | 87,055 |
June 30, 2017 | December 31, 2016 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash | $ | — | $ | — | ||||
Receivables: | ||||||||
Trade | 38,172 | 42,702 | ||||||
Affiliated companies | 1,505 | 1,321 | ||||||
Advances to affiliate | 123,999 | 45,137 | ||||||
Other | 595 | 598 | ||||||
Materials and supplies | 10,162 | 10,106 | ||||||
Exchange gas due from others | 1,082 | 3,869 | ||||||
Prepayments and other | 6,762 | 5,740 | ||||||
Total current assets | 182,277 | 109,473 | ||||||
PROPERTY, PLANT AND EQUIPMENT, at cost | 3,344,867 | 3,319,516 | ||||||
Less-Accumulated depreciation | 1,462,287 | 1,424,855 | ||||||
Total property, plant and equipment, net | 1,882,580 | 1,894,661 | ||||||
OTHER ASSETS: | ||||||||
Deferred charges | 1,112 | 2,122 | ||||||
Regulatory assets | 31,114 | 34,900 | ||||||
Total other assets | 32,226 | 37,022 | ||||||
Total assets | $ | 2,097,083 | $ | 2,041,156 |
June 30, 2017 | December 31, 2016 | |||||||
LIABILITIES AND OWNER’S EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Payables: | ||||||||
Trade | $ | 13,372 | $ | 11,243 | ||||
Affiliated companies | 6,607 | 7,293 | ||||||
Accrued liabilities: | ||||||||
Taxes, other than income taxes | 12,719 | 11,435 | ||||||
Interest | 3,593 | 3,501 | ||||||
Exchange gas due to others | 3,181 | 4,169 | ||||||
Exchange gas offset | 1,881 | 1,428 | ||||||
Customer advances | 1,027 | 1,893 | ||||||
Other | 9,968 | 5,224 | ||||||
Long-term debt due within one year | 249,737 | 184,924 | ||||||
Total current liabilities | 302,085 | 231,110 | ||||||
LONG-TERM DEBT | 331,729 | 334,236 | ||||||
OTHER NONCURRENT LIABILITIES: | ||||||||
Asset retirement obligations | 59,880 | 60,762 | ||||||
Regulatory liabilities | 35,367 | 30,717 | ||||||
Other | 3,227 | 7,316 | ||||||
Total other noncurrent liabilities | 98,474 | 98,795 | ||||||
CONTINGENT LIABILITIES AND COMMITMENTS (Note 2) | ||||||||
OWNER’S EQUITY: | ||||||||
Owner’s capital | 1,073,892 | 1,073,892 | ||||||
Retained earnings | 290,903 | 303,123 | ||||||
Total owner’s equity | 1,364,795 | 1,377,015 | ||||||
Total liabilities and owner’s equity | $ | 2,097,083 | $ | 2,041,156 |
Six months ended June 30, | ||||||||
2017 | 2016 | |||||||
OPERATING ACTIVITIES: | ||||||||
Net income | $ | 94,781 | $ | 87,083 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Depreciation | 50,829 | 50,729 | ||||||
Regulatory debits | 2,461 | 1,720 | ||||||
Amortization of deferred charges and credits | 683 | (190 | ) | |||||
Allowance for equity funds used during construction | (388 | ) | (431 | ) | ||||
Changes in current assets and liabilities: | ||||||||
Trade and other accounts receivable | 4,533 | 3,221 | ||||||
Affiliated receivables | (184 | ) | (218 | ) | ||||
Exchange gas due from others | 2,787 | 658 | ||||||
Materials and supplies | (56 | ) | 3 | |||||
Other current assets | (1,022 | ) | (102 | ) | ||||
Trade accounts payable | (962 | ) | 799 | |||||
Affiliated payables | (686 | ) | (5,476 | ) | ||||
Exchange gas due to others | (2,787 | ) | (658 | ) | ||||
Other accrued liabilities | 5,691 | (1,324 | ) | |||||
Changes in noncurrent assets and liabilities: | ||||||||
Deferred charges | 298 | (2,900 | ) | |||||
Noncurrent liabilities | (1,055 | ) | 5,697 | |||||
Net cash provided by operating activities | 154,923 | 138,611 | ||||||
FINANCING ACTIVITIES: | ||||||||
Payments of long-term debt | (185,000 | ) | (175,000 | ) | ||||
Proceeds from long-term debt | 249,102 | — | ||||||
Debt issue costs | (2,082 | ) | — | |||||
Cash distributions to parent | (107,000 | ) | (86,000 | ) | ||||
Net cash used in financing activities | (44,980 | ) | (261,000 | ) | ||||
INVESTING ACTIVITIES: | ||||||||
Property, plant and equipment: | ||||||||
Capital expenditures, net of equity AFUDC* | (31,493 | ) | (22,843 | ) | ||||
Contributions and advances for construction costs | 365 | 252 | ||||||
Disposal of property, plant and equipment, net | 48 | (364 | ) | |||||
Advances to affiliates, net | (78,863 | ) | 135,399 | |||||
Proceeds from insurance | — | 9,776 | ||||||
Net cash provided by (used in) investing activities | (109,943 | ) | 122,220 | |||||
NET INCREASE (DECREASE) IN CASH | — | (169 | ) | |||||
CASH AT BEGINNING OF PERIOD | — | 169 | ||||||
CASH AT END OF PERIOD | $ | — | $ | — | ||||
____________________________________ | ||||||||
* Increases to property, plant and equipment | $ | (33,894 | ) | $ | (18,451 | ) | ||
Changes in related accounts receivable, accounts payable, and accrued liabilities | 2,401 | (4,392 | ) | |||||
Capital expenditures, net of equity AFUDC | $ | (31,493 | ) | $ | (22,843 | ) |
Exhibit | Description | |
2 | Certificate of Conversion of Northwest Pipeline GP (Exhibit 2.1 to our report on Form 8-K, filed July 3, 2013 (File No. 001-07414)) and incorporated herein by reference. | |
3.1 | Certificate of Formation of Northwest Pipeline LLC (Exhibit 2.2 to our report on Form 8-K, filed July 3, 2013 (File No. 001-07414)) and incorporated herein by reference. | |
3.2 | Operating Agreement of Northwest Pipeline LLC (Exhibit 3.1 to our report on Form 8-K, filed July 3, 2013 (File No. 001-07414)) and incorporated herein by reference. | |
4.1 | Indenture, dated as of April 3, 2017, between Northwest Pipeline LLC and The Bank of New York Mellon Trust Company, N.A., as trustee (filed on April 3, 2017 as Exhibit 4.1 to Northwest Pipeline LLC’s current report on Form 8-K (File No. 0001-07414) and incorporated herein by reference). | |
10.1 | Registration Rights Agreement, dated April 3, 2017, between Northwest Pipeline LLC and the initial purchasers listed therein (filed on April 3, 2017 as Exhibit 10.1 to Northwest Pipeline LLC’s current report on Form 8-K (File No. 0001-07414) and incorporated herein by reference). | |
31.1* | Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002. | |
31.2* | Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002. | |
32** | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS* | XBRL Instance Document. | |
101.SCH* | XBRL Taxonomy Extension Schema. | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase. | |
101.DEF* | XBRL Taxonomy Definition Linkbase. | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase. | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase. |
* | Filed herewith. |
** | Furnished herewith. |
NORTHWEST PIPELINE LLC | |||
Registrant | |||
By: | /s/ Ted T. Timmermans | ||
Ted T. Timmermans Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Northwest Pipeline LLC; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Walter J. Bennett |
Walter J. Bennett | |
Sr. Vice President—West | |
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Northwest Pipeline LLC; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Ted T. Timmermans |
Ted T. Timmermans | |
Vice President, Controller, and Chief Accounting Officer | |
(Principal Financial Officer) |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Walter J. Bennett |
Walter J. Bennett |
Senior Vice President—West |
August 3, 2017 |
/s/ Ted T. Timmermans |
Ted T. Timmermans |
Vice President, Controller, and Chief Accounting Officer |
August 3, 2017 |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Aug. 03, 2017 |
|
Entity Information [Line Items] | ||
Entity registrant name | Northwest Pipeline LLC | |
Entity central index key | 0000110019 | |
Document type | 10-Q | |
Document period end date | Jun. 30, 2017 | |
Amendment flag | false | |
Document fiscal year focus | 2017 | |
Document fiscal period focus | Q2 | |
Current fiscal year end date | --12-31 | |
Entity filer category | Non-accelerated Filer | |
Entity common stock, shares outstanding | 0 |
Statement of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
OPERATING REVENUES | $ 115,094 | $ 115,569 | $ 235,594 | $ 236,017 |
OPERATING EXPENSES: | ||||
General and administrative | 13,421 | 13,038 | 27,502 | 26,865 |
Operation and maintenance | 19,125 | 21,231 | 34,522 | 38,483 |
Depreciation | 25,313 | 25,414 | 50,829 | 50,729 |
Regulatory debits | 1,213 | 871 | 2,461 | 1,720 |
Taxes, other than income taxes | 4,206 | 4,312 | 8,987 | 8,664 |
Total operating expenses | 63,278 | 64,866 | 124,301 | 126,461 |
OPERATING INCOME | 51,816 | 50,703 | 111,293 | 109,556 |
OTHER (INCOME) AND OTHER EXPENSES: | ||||
Interest expense | 8,448 | 10,952 | 16,811 | 22,429 |
Allowance for equity and borrowed funds used during construction | (362) | (242) | (512) | (625) |
Miscellaneous other (income) expenses, net | 98 | 31 | 213 | 669 |
Total other (income) and other expenses | 8,184 | 10,741 | 16,512 | 22,473 |
NET INCOME | 43,632 | 39,962 | 94,781 | 87,083 |
CASH FLOW HEDGES: | ||||
Amortization of cash flow hedges into Interest expense | 0 | (13) | 0 | (28) |
COMPREHENSIVE INCOME | $ 43,632 | $ 39,949 | $ 94,781 | $ 87,055 |
Basis of Presentation (Notes) |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION Northwest Pipeline LLC (Northwest) is indirectly owned by Williams Partners L.P. (WPZ), a publicly traded Delaware limited partnership, which is consolidated by The Williams Companies, Inc. (Williams). In January 2017, Williams permanently waived the WPZ general partner's incentive distribution rights, converted its 2 percent general partner interest in WPZ to a non-economic interest, and purchased additional WPZ common units. At June 30, 2017, Williams owned an approximate 74 percent limited partner interest in WPZ. In this report, Northwest is at times referred to in the first person as “we,” “us,” or “our.” General The accompanying interim financial statements do not include all the notes in our annual financial statements, and therefore, should be read in conjunction with the financial statements and notes thereto in our 2016 Annual Report on Form 10-K. The accompanying unaudited financial statements include all adjustments both normal recurring and others which, in the opinion of our management, are necessary to present fairly our interim financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Accounting Standards Issued But Not Yet Adopted In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-15 "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" (ASU 2016-15). ASU 2016-15 provides specific guidance on eight cash flow classification issues, including debt prepayment or debt extinguishment costs and distributions received from equity method investees, to reduce diversity in practice. ASU 2016-15 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. ASU 2016-15 requires a retrospective transition. We do not expect ASU 2016-15 to have a material impact on our financial statements. In June 2016, the FASB issued ASU 2016-13 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (ASU 2016-13). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans, and other instruments, entities will be required to use a new forward-looking "expected loss" model that generally will result in the earlier recognition of allowances for losses. The guidance also requires increased disclosures. ASU 2016-13 is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted. ASU 2016-13 requires varying transition methods for the different categories of amendments. We do not expect ASU 2016-13 to have a significant impact on our financial statements. In February 2016, the FASB issued ASU 2016-02 "Leases (Topic 842)" (ASU 2016-02). ASU 2016-02 establishes a comprehensive new lease accounting model. The ASU 2016-02 clarifies the definition of a lease, requires a dual approach to lease classification similar to current lease classifications, and causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. ASU 2016-02 requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements. We are in the process of reviewing contracts to identify leases, as well as evaluating the applicability of ASU 2016-02 to contracts involving easement/rights-of-way. In May 2014, the FASB issued ASU 2014-09 establishing Accounting Standards Codification (ASC) Topic 606, "Revenue from Contracts with Customers" (ASC 606). ASC 606 establishes a comprehensive new revenue recognition model designed to depict the transfer of goods or services to a customer in an amount that reflects the consideration the entity expects to be entitled to receive in exchange for those goods or services and requires significantly enhanced revenue disclosures. In August 2015, the FASB issued ASU 2015-14 "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date" (ASU 2015-14). Per ASU 2015-14, the standard is effective for interim and annual reporting periods beginning after December 15, 2017. ASC 606 allows either full retrospective or modified retrospective transition and early adoption is permitted for annual periods beginning after December 15, 2016. We continue to evaluate the impact the standard may have on our financial statements. For each revenue contract type, we are conducting a formal contract review process to evaluate the impact, if any, that the new revenue standard may have. We are continuing our evaluation of the application of accounting for noncash consideration as it relates to certain contracts where we receive or retain natural gas as part of the service arrangement. We are unable to determine the potential impact upon the amount and timing of revenue recognition. We continue to evaluate and develop disclosures required under the new standard, with a particular focus on the scope of contracts subject to disclosure of remaining performance obligations. Additionally, we have identified possible financial system and internal control changes necessary for adoption. We currently anticipate utilizing a modified retrospective transition upon the adoption of ASC 606 as of January 1, 2018. |
Rate and Regulatory Matters (Notes) |
6 Months Ended |
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Jun. 30, 2017 | |
Public Utilities, Rate Matters [Abstract] | |
Public Utilities, Disclosure of Rate Matters [Text Block] | RATE AND REGULATORY MATTERS Rate Case Settlement Filing On January 23, 2017, we filed for Federal Energy Regulatory Commission (FERC) approval a Stipulation and Settlement Agreement (Settlement) and were assigned Docket No. RP17-346. The Settlement specified an annual cost of service of $440 million and established a new general system firm Rate Schedule TF-1 (Large Customer) demand rate of $0.39294/Dth with a $0.00832 commodity rate (Phase 1) and a demand rate of $0.39033/Dth with a $0.00832 commodity rate (Phase 2). Phase 1 rates become effective January 1, 2018, with Phase 2 rates becoming effective October 1, 2018. The annual cost of service does not change from Phase 1 to Phase 2, but the Phase 2 rates reflect the termination of fifteen-year levelized contracts that will now become Rate Schedule TF-1 (Large Customer) contracts. Provisions were included in the Settlement that we can file a general rate case to place new rates into effect after October 1, 2018, and that a general rate case must be filed for new rates to become effective no later than January 1, 2023. The FERC has been without a quorum since February 4, 2017. This lack of quorum has left FERC unable to formally approve the Settlement. In response, on March 29, 2017, we filed tariff records with the FERC to extend our requirement to file an NGA section 4 general rate case "by not later than July 1, 2017" (as required in our prior Settlement in Docket No. RP12-490 and our pending 2017 Settlement in RP 17-346). These tariff records also provide a means to place the rate reductions of the 2017 Settlement into effect commencing January 1, 2018 until a quorum at FERC is restored and can formally approve the Settlement. This new filing was assigned Docket No. RP17-567. On April 12, 2017, the FERC issued an order accepting the tariff records effective May 1, 2017. |
Contingent Liabilities and Commitments (Notes) |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingent Liabilities and Commitments | CONTINGENT LIABILITIES AND COMMITMENTS Environmental Matters We are subject to the National Environmental Policy Act and other federal and state legislation regulating the environmental aspects of our business. Except as discussed below, our management believes that we are in substantial compliance with existing environmental requirements. Environmental expenditures are expensed or capitalized depending on their future economic benefit and potential for rate recovery. We believe that, with respect to any expenditures required to meet applicable standards and regulations, the Federal Energy Regulatory Commission would grant the requisite rate relief so that substantially all of such expenditures would be permitted to be recovered through rates. Beginning in the mid-1980s, we evaluated many of our facilities for the presence of toxic and hazardous substances to determine to what extent, if any, remediation might be necessary. We identified polychlorinated biphenyl (PCB) contamination in air compressor systems, soils, and related properties at certain compressor station sites. Similarly, we identified hydrocarbon impacts at these facilities due to the former use of earthen pits, lubricating oil leaks or spills, and excess pipe coating released to the environment. In addition, heavy metals have been identified at these sites due to the former use of mercury containing meters and paint and welding rods containing lead, cadmium, and arsenic. The PCBs were remediated pursuant to a Consent Decree with the U.S. Environmental Protection Agency (EPA) in the late 1980s, and we conducted a voluntary clean-up of the hydrocarbon and mercury impacts in the early 1990s. In 2005, the Washington Department of Ecology required us to re-evaluate our previous clean-ups in Washington. During 2006 to 2015, 129 meter stations were evaluated, of which 82 required remediation. As of June 30, 2017, all of the meter stations have been remediated. Initial assessments have been completed at all thirteen compressor stations in Washington. Additional assessments are ongoing at two of these compressor stations. Remediation has been completed at eleven of the thirteen compressor stations. On the basis of the findings to date, we estimate that environmental assessment and remediation costs will total approximately $4.4 million, measured on an undiscounted basis, and are expected to be incurred through 2020. At June 30, 2017 and December 31, 2016, we had accrued liabilities totaling approximately $4.4 million and $4.4 million, respectively, for these costs. We are conducting environmental assessments and implementing a variety of remedial measures that may result in increases or decreases in the total estimated costs. In March 2008, the EPA promulgated a new, lower National Ambient Air Quality Standard (NAAQS) for ground-level ozone. In May 2012, the EPA completed designation of new eight-hour ozone non-attainment areas. Based on the published designations, no Northwest facilities are located within the non-attainment areas. At this time, it is unknown whether future state regulatory actions associated with implementation of the 2008 ozone standard will impact our operations and increase the cost of additions to property, plant and equipment. Until any additional state regulatory actions are proposed, we are unable to estimate the cost of additions that may be required to meet any such new regulation. In December 2014, the EPA proposed to further reduce the ground-level ozone NAAQS from the March 2008 levels and subsequently finalized a rule on October 1, 2015. We are monitoring the rule's implementation as the reduction will trigger additional federal and state regulatory actions that may impact our operations. As a result, the cost of additions to property, plant, and equipment is expected to increase. We are unable at this time to estimate with any certainty the cost of additions that may be required to meet new regulations. On January 22, 2010, the EPA set a new one-hour nitrogen dioxide (NO2) NAAQS. The effective date of the new NO2 standard was April 12, 2010. On January 20, 2012, the EPA determined pursuant to available information that no area in the country is violating the 2010 NO2 NAAQS, and thus, designated all areas of the country as “unclassifiable/attainment.” Also, at that time, the EPA noted its plan to deploy an expanded NO2 monitoring network beginning in 2013. However, on October 5, 2012, the EPA proposed a graduated implementation of the monitoring network between January 1, 2014 and January 1, 2017. Once three years of data are collected from the new monitoring network, the EPA will reassess attainment status with the one-hour NO2 NAAQS. Until that time, the EPA or states may require ambient air quality modeling on a case by case basis to demonstrate compliance with the NO2 standard. Because we are unable to predict the outcome of the EPA’s or states’ future assessment using the new monitoring network, we are unable to estimate the cost of additions that may be required to meet this regulation. Other Matters Various other proceedings are pending against us and are considered incidental to our operations. Summary We estimate that for all matters for which we are able to reasonably estimate a range of loss, including those noted above and others that are not individually significant, our aggregate reasonably possible losses beyond amounts accrued for all of our contingent liabilities are immaterial to our expected future annual results of operations, liquidity, and financial position. These calculations have been made without consideration of any potential recovery from third parties. We have disclosed all significant matters for which we are unable to reasonably estimate a range of possible loss. |
Debt and Financing Arrangement (Notes) |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt and Financing Arrangement | DEBT AND FINANCING ARRANGEMENT Credit Facility We, along with WPZ and Transcontinental Gas Pipe Line Company, LLC, are party to a credit agreement with aggregate commitments available of $3.5 billion, with up to an additional $500 million increase in aggregate commitments available under certain circumstances. Total letter of credit capacity available to WPZ under this credit facility is $1.125 billion. We are able to borrow up to $500 million under this credit facility to the extent not otherwise utilized by the other co-borrowers. At June 30, 2017, no letters of credit have been issued and no loans were outstanding under the credit facility. WPZ participates in a commercial paper program, and WPZ management considers amounts outstanding under this program to be a reduction of available capacity under the credit facility. The program allows a maximum outstanding amount at any time of $3 billion of unsecured commercial paper notes. At June 30, 2017, no commercial paper was outstanding under the commercial paper program. Issuance and Retirement of Long-Term Debt On April 3, 2017, we issued $250 million of 4.00 percent senior unsecured notes due 2027 to investors in a private debt placement. We used the net proceeds to repay the $185 million, 5.95 percent notes that matured on April 15, 2017, and to fund capital expenditures. As part of the issuance, we entered into a registration rights agreement with the initial purchaser of the unsecured notes. We are obligated to file and consummate a registration statement for an offer to exchange the notes for a new issue of substantially identical notes registered under the Securities Act of 1933, as amended, within 365 days from the closing and to use commercially reasonable efforts to complete the exchange offer. We are required to provide a shelf registration statement to cover resales of the notes under certain circumstances. If we fail to fulfill these obligations, additional interest will be accrued on the affected securities. The rate of additional interest will be 0.25 percent per annum on the principal amount of the affected securities for the first 90-day period immediately following the occurrence of a registration default, increasing by an additional 0.25 percent per annum with respect to each subsequent 90-day period thereafter, up to a maximum amount for all such registration defaults of 0.5 percent annually. Following the cure of any registration defaults, the accrual of additional interest will cease. Long-Term Debt due within one-year The $250 million, 6.05 percent notes due June 15, 2018, are classified as long-term debt due within in one-year in the accompanying Balance Sheet as of June 30, 2017. |
Financial Instruments (Notes) |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments | FINANCIAL INSTRUMENTS Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: Cash and advances to affiliate—The carrying amounts approximate fair value because of the short-term nature of these instruments. Long-term debt—The disclosed fair value of our long-term debt, which we consider as a level 2 measurement, is determined by a market approach using broker quoted indicative period-end bond prices. The quoted prices are based on observable transactions in less active markets for our debt or similar instruments. The carrying amount and estimated fair value of our long-term debt, including current maturities, were $581.5 million and $614.5 million, respectively, at June 30, 2017, and $519.2 million and $546.8 million, respectively, at December 31, 2016. |
Transactions with Affiliates (Notes) |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Transactions with Affiliates | TRANSACTIONS WITH AFFILIATES We are a participant in WPZ’s cash management program. At June 30, 2017 and December 31, 2016, the advances due to us by WPZ totaled approximately $124.0 million and $45.1 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 0.83 percent at June 30, 2017. The interest income from these advances was minimal during the three and six months ended June 30, 2017 and June 30, 2016. Such interest income is included in Other (Income) and Other Expenses – Miscellaneous other (income) 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 $23.2 million and $46.2 million in the three and six months ended June 30, 2017, respectively, and $21.1 million and $46.1 million in the three and six months ended June 30, 2016, 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. The amount billed to us for the six months ended June 30, 2016, includes $2.0 million recognized in the first quarter of 2016 for severance and other related costs associated with a reduction in workforce. During the six months ended June 30, 2017 and 2016, we declared and paid cash distributions to our parent of $107.0 million and $86.0 million, respectively. During July 2017, we declared and paid an additional cash distribution of $41.0 million to our parent. 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. |
Basis of Presentation (Details) |
1 Months Ended | 6 Months Ended |
---|---|---|
Jan. 31, 2017 |
Jun. 30, 2017 |
|
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | ||
Parent, limited partner ownership percentage | 74.00% | |
Financial Repositioning [Member] | ||
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | ||
Parent, general partner ownership percentage | 2.00% |
Rate and Regulatory Matters (Details) $ in Millions |
Oct. 01, 2018
$ / dekatherm
|
Jan. 01, 2018
$ / dekatherm
|
Jan. 23, 2017
USD ($)
|
---|---|---|---|
Public Utilities, General Disclosures [Line Items] | |||
Annual Cost of Service Pending | $ | $ 440 | ||
Subsequent Event [Member] | Phase 1 Demand Rate per Dth Pending [Member] | |||
Public Utilities, General Disclosures [Line Items] | |||
Demand Rate Pending | 0.39294 | ||
Subsequent Event [Member] | Phase 1 Commodity Rate Pending [Member] | |||
Public Utilities, General Disclosures [Line Items] | |||
Commodity Rate Pending | 0.00832 | ||
Subsequent Event [Member] | Phase 2 Demand Rate per Dth Pending [Member] | |||
Public Utilities, General Disclosures [Line Items] | |||
Demand Rate Pending | 0.39033 | ||
Subsequent Event [Member] | Phase 2 Commodity Rate Pending [Member] | |||
Public Utilities, General Disclosures [Line Items] | |||
Commodity Rate Pending | 0.00832 |
Contingent Liabilities and Commitments (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Environmental Matters [Abstract] | ||
Environmental assessment and remediation costs, undiscounted | $ 4.4 | |
Accrued environmental liabilities | $ 4.4 | $ 4.4 |
Debt and Financing Arrangement Long-term Debt Instruments (Details) - USD ($) $ in Thousands |
Apr. 15, 2017 |
Jun. 30, 2017 |
Apr. 03, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|
Debt Instrument [Line Items] | ||||
Additional Interest Rate Accrued For Default Of Registration Rights Agreements First Period | 0.25% | |||
Additional Interest Rate Accrued For Default Of Registration Rights Agreements Each Subsequent Period | 0.25% | |||
Maximum Additional Interest Rate Accrued For Default Of Registration Rights Agreements All Periods | 0.50% | |||
Long-term debt due within one year | $ 249,737 | $ 184,924 | ||
4% Senior Unsecured Notes Due 2027 [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term debt, face amount | $ 250,000 | |||
Senior Unsecured Interest Rate | 4.00% | |||
5.95% Senior Unsecured Notes due 2017 [Member] | ||||
Debt Instrument [Line Items] | ||||
Retirement of Long-Term Debt | $ 185,000 | |||
Senior Unsecured Interest Rate | 5.95% | |||
6.05% due 2018 [Member] | ||||
Debt Instrument [Line Items] | ||||
Senior Unsecured Interest Rate | 6.05% | |||
Long-term debt due within one year | $ 250,000 |
Financial Instruments (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Carrying (reported) amount, fair value disclosure [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt including current maturities | $ 581.5 | $ 519.2 |
Estimate of fair value, fair value disclosure [Member] | Fair value, inputs, level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt including current maturities | $ 614.5 | $ 546.8 |
Transactions with Affiliates (Details) $ in Thousands |
1 Months Ended | 3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|---|
Jul. 31, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
employee
|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2017
USD ($)
employee
|
Jun. 30, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Related Party Transaction [Line Items] | ||||||
Advances to affiliate | $ 123,999 | $ 123,999 | $ 45,137 | |||
Related party transaction, rate | 0.83% | |||||
Entity number of employees | employee | 0 | 0 | ||||
Related party transaction, expenses from transactions with related party | $ 23,200 | $ 21,100 | $ 46,200 | $ 46,100 | ||
Severance and other related costs | 2,000 | |||||
Cash distributions to parent | 107,000 | $ 86,000 | ||||
Williams Partners L.P. [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Advances to affiliate | $ 124,000 | $ 124,000 | $ 45,100 | |||
Subsequent Event [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Cash distributions to parent | $ 41,000 |
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