Transactions with Affiliates (Notes)

9 Months Ended

Sep. 30, 2022

Related Party Transactions [Abstract]

Transactions with Affiliates

Transactions with AffiliatesWe are a participant in Williams’ cash management program, and we make advances to and receive advances from Williams. At September 30, 2022 and December 31, 2021, our advances to Williams totaled approximately $324.8 million and $281.4 million, respectively. These advances are represented by demand notes and are classified as Receivables - Advances to affiliate on the Balance Sheet. Advances are stated at the historical carrying amounts. Interest expense and income are recognized when earned and the collectability is reasonably assured. The interest rate on these intercompany demand notes is based upon the daily overnight investment rate paid on Williams’ excess cash at the end of each month, which was 2.74 percent at September 30, 2022. The interest income from these

advances was $1.8 million and $2.3 million for the three and nine months ended September 30, 2022, respectively, and minimal for each of the three and nine months ended September 30, 2021. Such interest income is included in Other (Income) and Other Expenses – Miscellaneous other (income) loss, net on the Statement of Net Income.

Included in Operating Revenues on the Statement of Net Income are revenues received from affiliates of $0.8 million and $1.8 million for the three and nine months ended September 30, 2022, respectively, and $0.3 million and $0.9 million for the three and nine months ended September 30, 2021, respectively. The rates charged to provide services to affiliates are the same as those that are charged to similarly-situated nonaffiliated customers.

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 have recorded approximately $22.9 million and $65.1 million for the three and nine months ended September 30, 2022, respectively, and $21.5 million and $61.8 million for the three and nine months ended September 30, 2021, respectively, for these service expenses, which are primarily included in General and administrative and Operation and maintenance expenses on the Statement of Net Income.

During October 2022, we declared and paid a cash distribution of $29.9 million to our parent.