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,
	2017		2016		2015
	(Thousands of Dollars)
Puget Sound Energy, Inc.	$	120,226	$	120,351	$	118,384
Northwest Natural Gas Company	51,743		49,895		50,857
Cascade Natural Gas Corporation	48,071		47,951		48,363

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, 2017 and 2016, the advances due to us by WPZ totaled approximately $137.7 million and $45.1 million, respectively. These advances are represented by demand notes and are classified as Receivables - Advances to Affiliates 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 1.16 percent at December 31, 2017. The interest income from these advances was minimal during the years ended December 31, 2017, 2016, and 2015. 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 $96.5 million, $92.8 million, and $100.4 million in the years ended December 31, 2017, 2016, and 2015, 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 during 2016 includes $2.4 million for severance and other related costs associated with a reduction in workforce primarily recognized in the first quarter.

During 2017, 2016, and 2015, we declared and paid cash distributions to our parent of $186.0 million, $174.0 million, and $168.0 million, respectively. During January 2018, we declared and paid cash distributions of $34.0 million to our parent.