e10vq

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-7414

NORTHWEST PIPELINE GP

(Exact name of registrant as specified in its charter)


DELAWARE		26-1157701

(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

295 Chipeta Way, Salt Lake City, Utah		84108

(Address of principal executive offices)		(Zip Code)

(801) 583-8800

(Registrant’s telephone number, including area code)

No Change

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o	Non-accelerated filer þ	Smaller reporting company o
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

NORTHWEST PIPELINE GP

TABLE OF CONTENTS


	Page
PART I. FINANCIAL INFORMATION:

Item 1. Financial Statements -

Consolidated Statements of Income, three and nine months ended September 30, 2009 and 2008		1

Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008		2

Consolidated Statements of Cash Flows, nine months ended September 30, 2009 and 2008		4

Notes to Consolidated Financial Statements		5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		10

Item 3. Quantitative and Qualitative Disclosures about Market Risk		16

Item 4T. Controls and Procedures		17

PART II. OTHER INFORMATION:

Item 1. Legal Proceedings		18

Item 1A. Risk Factors		18

Item 6. Exhibits		20
EX-31.1
EX-31.2
EX-32.1

Forward Looking Statements

Certain matters contained in this report include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995.

All statements, other than statements of historical facts, included in this report that address activities, events or developments that we expect, believe or anticipate will exist or may occur in the future, are forward-looking statements. Forward-looking statements can be identified by various forms of words such as “anticipates,” “believes,” “could,” “may,” “should,” “continues,” “estimates,” “expects,” “forecasts,” “intends,” “might,” “objectives,” “planned,” “potential,” “projects,” “scheduled,” “will” or other similar expressions. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to management and include, among others, statements regarding:

	•		Amounts and nature of future capital expenditures;

	•		Expansion and growth of our business and operations;

•

Financial condition and liquidity;

	•		Business strategy;

	•		Cash flow from operations or results of operations;

	•		Rate case filings; and

	•		Natural gas prices and demand.

Forward-looking statements are based on numerous assumptions, uncertainties and risks that could cause future events or results to be materially different from those stated or implied in this report. Many of the factors that will determine these results are beyond our ability to control or predict. Specific factors that could cause actual results to differ from results contemplated by the forward-looking statements include, among others, the following:

	•		Availability of supplies (including the uncertainties inherent in assessing and estimating future natural gas reserves), market demand, volatility of prices, and the availability and cost of capital;

	•		Inflation, interest rates, and general economic conditions (including the current economic slowdown and the disruption of global credit markets and the impact of these events on our customers and suppliers);

	•		The strength and financial resources of our competitors;

	•		Development of alternative energy sources;

	•		The impact of operational and development hazards;

	•		Costs of, changes in, or the results of laws, government regulations (including proposed climate change legislation), environmental liabilities, litigation and rate proceedings;

	•		Our costs and funding obligations for defined benefit pension plans and other postretirement benefit plans;

	•		Changes in maintenance and construction costs;

	•		Changes in the current geopolitical situation;

	•		Our exposure to the credit risk of our customers;

	•		Risks related to strategy and financing, including restrictions stemming from our debt agreements, future changes in our credit ratings and the availability and cost of credit;

	•		Risks associated with future weather conditions;

	•		Acts of terrorism; and

	•		Additional risks described in our filings with the Securities and Exchange Commission (SEC).

Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, we caution investors not to unduly rely on our forward-looking statements. We disclaim any obligations to and do not intend to update the above list or to announce publicly the result of any revisions to any of the forward-looking statements to reflect future events or developments.

In addition to causing our actual results to differ, the factors listed above and referred to below may cause our intentions to change from those statements of intention set forth in this report. Such changes in our intentions may also cause our results to differ. We may change our intentions, at any time and without notice, based upon changes in such factors, our assumptions or otherwise.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

NORTHWEST PIPELINE GP

CONSOLIDATED STATEMENTS OF INCOME

(Thousands of Dollars)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
OPERATING REVENUES	$	106,615		$	108,542		$	325,919		$	322,397


OPERATING EXPENSES:
General and administrative		16,114			14,129			48,932			45,537
Operation and maintenance		16,561			16,732			54,127			53,137
Depreciation		21,570			21,327			64,858			64,379
Regulatory credits		(608	)		(778	)		(1,793	)		(2,359	)
Taxes, other than income taxes		3,833			4,090			10,485			12,819


Total operating expenses		57,470			55,500			176,609			173,513


Operating income		49,145			53,042			149,310			148,884


OTHER INCOME — net
Interest income —
Affiliated		9			221			60			790
Other		1			1			13			6
Allowance for equity funds used during construction		848			374			1,322			640
Miscellaneous other income (expense), net		288			(89	)		391			(190	)


Total other income — net		1,146			507			1,786			1,246


INTEREST CHARGES:
Interest on long-term debt		11,110			11,114			33,329			31,221
Other interest		1,365			1,399			4,128			4,170
Allowance for borrowed funds used during construction		(444	)		(200	)		(691	)		(340	)


Total interest charges		12,031			12,313			36,766			35,051


NET INCOME	$	38,260		$	41,236		$	114,330		$	115,079

See accompanying notes.

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NORTHWEST PIPELINE GP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands of Dollars)

(Unaudited)


	Nine Months Ended
	September 30,
	2009			2008
OPERATING ACTIVITIES:
Net Income	$	114,330		$	115,079
Adjustments to reconcile to net cash provided by operating activities —
Depreciation		64,858			64,379
Regulatory credits		(1,793	)		(2,359	)
Gain on sale of property, plant and equipment		(243	)		—
Amortization of deferred charges and credits		9,421			6,938
Allowance for equity funds used during construction		(1,322	)		(640	)
Reserve for doubtful accounts		—			(7	)
Cash provided (used) by changes in current assets and liabilities:
Trade accounts receivable		3,182			(617	)
Affiliated receivables		659			(530	)
Exchange gas due from others		10,425			9,517
Materials and supplies		(93	)		437
Other current assets		661			208
Trade accounts payable		6,745			502
Affiliated payables		(4,998	)		(4,474	)
Exchange gas due to others		(10,425	)		(9,517	)
Other accrued liabilities		13,076			18,221
Changes in noncurrent assets and liabilities:
Deferred charges		(3,665	)		(1,923	)
Other deferred credits		(6,251	)		(4,883	)

Net cash provided by operating activities		194,567			190,331

FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt		—			249,333
Retirement of long-term debt		—			(250,000	)
Debt issuance costs		—			(2,099	)
Capital contribution from parent		34,050			—
Proceeds from sale of partnership interest		—			300,900
Distributions paid		(100,000	)		(388,342	)
Changes in cash overdrafts		(415	)		(4,506	)

Net cash used in financing activities		(66,365	)		(94,714	)

INVESTING ACTIVITIES:
Property, plant and equipment —
Capital expenditures*		(102,577	)		(64,621	)
Proceeds from sales		549			2,698
Advances to affiliates		(26,141	)		(33,940	)

Net cash used in investing activities		(128,169	)		(95,863	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		33			(246	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		345			497


CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	378		$	251


* Increases to property, plant and equipment	$	(110,544	)	$	(57,724	)
Changes in related accounts payable and accrued liabilities		7,967			(6,897	)

Capital expenditures	$	(102,577	)	$	(64,621	)

See accompanying notes.

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NORTHWEST PIPELINE GP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

The accompanying interim consolidated financial statements do not include all the notes in our annual financial statements, and therefore, should be read in conjunction with the consolidated financial statements and notes thereto in our 2008 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 financial position at September 30, 2009, and results of operations for the three and nine months ended September 30, 2009 and 2008, and cash flows for the nine months ended September 30, 2009 and 2008.

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.

Estimates and assumptions which, in the opinion of management, are significant to the underlying amounts included in the financial statements and for which it would be reasonably possible that future events or information could change those estimates include: 1) litigation-related contingencies; 2) environmental remediation obligations; 3) impairment assessments of long-lived assets; 4) depreciation; 5) pension and other post-employment benefits; and 6) asset retirement obligations.

Corporate Structure and Control

Northwest Pipeline GP (Northwest) is owned 35 percent by Williams Pipeline Partners Holdings LLC, a wholly-owned subsidiary of Williams Pipeline Partners L.P. (WMZ) and 65 percent by WGPC Holdings LLC, a wholly-owned subsidiary of The Williams Companies, Inc. (Williams). Through its ownership interests in each of our partners, Williams directly and indirectly owns 81.7 percent of Northwest as of September 30, 2009.

In this report, Northwest is at times referred to in the first person as “we”, “us” or “our.”

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Northwest and Northwest Pipeline Services LLC, a variable interest entity (VIE) for which Northwest is the primary beneficiary.

Subsequent Events

We have evaluated our disclosure of subsequent events through the time of filing this Form 10-Q with the SEC on October 29, 2009.

Accounting Standards Issued But Not Yet Adopted

In August 2009, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2009-5, “Fair Value Measurements and Disclosures (Topic 820) — Measuring Liabilities at Fair Value.” This Update provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more prescribed techniques. The amendments in this Update also clarify that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. Additionally, this Update clarifies that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The guidance provided in this Update is effective for us beginning with the fourth quarter of 2009. We are currently evaluating this Update to determine the impact to our Consolidated Financial Statements.

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NORTHWEST PIPELINE GP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

In June 2009, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 167, “Amendments to FASB Interpretation No. 46(R)” (SFAS No. 167). This Statement amends Interpretation 46(R) to require an entity to perform a qualitative analysis to determine whether the entity’s variable interest or interests give it a controlling financial interest in a VIE. This analysis identifies the primary beneficiary of a VIE as the entity that has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits of the VIE. SFAS No. 167 amends Interpretation 46(R) to replace the quantitative-based risks and rewards approach previously required for determining the primary beneficiary of a VIE. SFAS No. 167 is effective as of the beginning of an entity’s first annual reporting period that begins after November 15, 2009 and for interim periods within that first annual reporting period. Earlier application is prohibited. We will assess the application of this Statement on our Consolidated Financial Statements.

2. CONTINGENT LIABILITIES AND COMMITMENTS

Legal Proceedings

In 1998, the United States Department of Justice (DOJ) informed Williams that Jack Grynberg, an individual, had filed claims under the False Claims Act on behalf of himself and the federal government in the United States District Court for the District of Colorado against Williams, certain of its wholly-owned subsidiaries (including us) and approximately 300 other energy companies. Grynberg alleged violations of the False Claims Act in connection with the measurement, royalty valuation and purchase of hydrocarbons. The claims sought an unspecified amount of royalties allegedly not paid to the federal government, treble damages, a civil penalty, attorneys’ fees and costs. In 1999, the DOJ announced that it would not intervene in any of the Grynberg cases. Also in 1999, the Panel on Multi-District Litigation transferred all of these cases, including those filed against us, to the federal court in Wyoming for pre-trial purposes. The District Court dismissed all claims against Williams and its wholly-owned subsidiaries, including us. On March 17, 2009, the Tenth Circuit Court of Appeals affirmed the District Court’s dismissal. On October 5, 2009, the United States Supreme Court denied Grynberg’s petition for a writ of certiorari requesting review of the Tenth Circuit Court of Appeals ruling. This matter is concluded.

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, Federal Energy Regulatory Commission (FERC) would grant the requisite rate relief so that substantially all of such expenditures would be permitted to be recovered through rates. We believe that compliance with applicable environmental requirements is not likely to have a material effect upon our financial position, liquidity or results of operations.

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 and mercury contamination at certain natural gas metering sites. 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 mercury clean-ups in Washington. Currently, we are conducting assessment and remediation activities needed to bring the sites up to Washington’s current environmental standards. At September 30, 2009, we had accrued liabilities totaling approximately $8.3 million for these costs which are expected to be incurred through 2014. We are conducting environmental assessments and implementing a variety of remedial measures that may result in increases or decreases in the total estimated costs. We consider these costs associated with compliance with environmental laws and regulations to be prudent costs incurred in the ordinary course of business and, therefore, recoverable through our rates.

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NORTHWEST PIPELINE GP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

In March 2008, the EPA promulgated a new, lower National Ambient Air Quality Standard (NAAQS) for ground-level ozone. Within two years, the EPA was expected to designate new eight-hour ozone non-attainment areas. Designation of new eight-hour ozone non-attainment areas will result in additional federal and state regulatory actions that would likely impact our operations and increase the cost of additions to property, plant and equipment. In September 2009, the EPA announced it would reconsider the 2008 NAAQS for ground level ozone to ensure that the standards are clearly grounded in science, and are protective of both public health and the environment. As a result, the EPA has delayed designation of new eight-hour ozone non-attainment areas under the 2008 standards until the reconsideration is complete. Additionally, the EPA is expected to promulgate additional hazardous air pollutant regulations in 2010 that will likely impact our operations. We are unable at this time to estimate with any certainty the cost of additions that may be required to meet new regulations. Management considers costs associated with compliance with the environmental laws and regulations described above to be prudent costs incurred in the ordinary course of business and, therefore, recoverable through our rates.

Safety Matters

Pipeline Integrity Regulations We have developed an Integrity Management Plan that we believe meets the United States Department of Transportation Pipeline and Hazardous Materials Safety Administration final rule that was issued pursuant to the requirements of the Pipeline Safety Improvement Act of 2002. In meeting the integrity regulations, we have identified high consequence areas and completed our baseline assessment plan. We are on schedule to complete the required assessments within specified timeframes. Currently, we estimate that the cost to perform required assessments and associated remediation will be between $110 million and $135 million over the remaining assessment period of 2009 through 2012. Our management considers the costs associated with compliance with the rule to be prudent costs incurred in the ordinary course of business and, therefore, recoverable through our rates.

Other Matters

In addition to the foregoing, various other proceedings are pending against us incidental to our operations.

Summary

Litigation, arbitration, regulatory matters, environmental matters, and safety matters are subject to inherent uncertainties. Were an unfavorable ruling to occur, there exists the possibility of a material adverse impact on the results of operations in the period in which the ruling occurs. Management, including internal counsel, currently believes that the ultimate resolution of the foregoing matters, taken as a whole and after consideration of amounts accrued, insurance coverage, recovery from customers or other indemnification arrangements, will not have a material adverse effect on our future liquidity or financial position.

Cash Distributions to Partners

On or before the end of the calendar month following each quarter, available cash is distributed to our partners as required by our general partnership agreement. Available cash with respect to any quarter is generally defined as the sum of all cash and cash equivalents on hand at the end of the quarter, plus cash on hand from working capital borrowings made subsequent to the end of that quarter (as determined by the management committee), less cash reserves as established by the management committee as necessary or appropriate for the conduct of our business and to comply with any applicable law or agreement. During the nine months ended September 30, 2009, we declared and paid equity distributions of $100 million to our partners. In October 2009, we declared equity distributions of $35.0 million to our partners, to be paid on October 30, 2009.

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NORTHWEST PIPELINE GP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

3. DEBT AND FINANCING ARRANGEMENTS

Debt Covenants

Our debt agreements contain restrictions on our ability to incur secured debt beyond certain levels.

Line of Credit Arrangements

Williams has a $1.5 billion unsecured revolving credit facility (Credit Facility) with a maturity date of May 1, 2012. We have access to $400 million under the Credit Facility to the extent not utilized by Williams. Lehman Commercial Paper Inc., which is committed to fund up to $70 million of the Credit Facility, filed for bankruptcy in October of 2008. Williams expects that its ability to borrow under this facility is reduced by this committed amount. Consequently, we expect our ability to borrow under the Credit Facility is reduced by approximately $18.7 million. The committed amounts of other participating banks remain in effect. As of September 30, 2009, there were no letters of credit issued by the participating institutions and no revolving credit loans outstanding. Our ratio of debt to capitalization must be no greater than 55 percent under the Credit Facility. At September 30, 2009, we are in compliance with this covenant.

4. 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, cash equivalents and advances to affiliate — The carrying amounts of these items approximates their fair value.

Long-term debt — The fair value of our publicly traded long-term debt is valued using indicative period-end traded bond market prices. Private debt is valued based on market rates and the prices of similar securities with similar terms and credit ratings. The carrying amount and estimated fair value of our long-term debt, including current maturities, were $693.4 million and $749.7 million, respectively, at September 30, 2009, and $693.2 million and $572.0 million, respectively, at December 31, 2008.

5. TRANSACTIONS WITH AFFILIATES

As a participant in Williams’ cash management program, we make advances to and receive advances from Williams. At September 30, 2009 and December 31, 2008, the advances due to us by Williams totaled approximately $92.1 million and $66.0 million, respectively. The advances are represented by demand notes. The interest rate on these demand notes was based upon the overnight investment rate paid on Williams’ excess cash, which was approximately 0.13 percent at September 30, 2009. We received interest income from advances to Williams of $9 thousand and $60 thousand during the three and nine months ended September 30, 2009, respectively, and $221 thousand and $790 thousand during the three and nine months ended September 30, 2008, respectively. Such interest income is included in “Other Income — net: Interest income — Affiliated” on the accompanying Consolidated Statements of Income.

Williams’ corporate overhead expenses allocated to us were $4.8 million and $14.3 million for the three and nine months ended September 30, 2009, respectively, and $3.6 million and $12.8 million for the three and nine months ended September 30, 2008, respectively. Such expenses have been allocated to us by Williams primarily based on the Modified Massachusetts formula, which is a FERC-approved method utilizing a combination of net revenues, gross payroll and gross plant for the allocation base. In addition, Williams or an affiliate has provided executive, data processing, legal, accounting, internal audit, human resources and other administrative services to us on a direct charge basis, which totaled $4.3 million and $12.3 million for the three and nine months ended September 30, 2009, respectively, and $3.9 million and $12.2 million for the three and nine months ended September 30, 2008, respectively. These expenses are included in “General and administrative expense” on the accompanying Consolidated Statements of Income.

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NORTHWEST PIPELINE GP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

During the periods presented, our revenues include transportation transactions and rental of communication facilities with subsidiaries of Williams. Combined revenues for these activities totaled $1.2 million and $9.0 million for the three and nine months ended September 30, 2009, respectively, and $3.6 million and $11.1 million for the three and nine months ended September 30, 2008, respectively.

Through July 2009, we leased the Parachute Lateral facilities from an affiliate. Under the terms of the operating lease, we paid monthly rent equal to the revenues collected from transportation services on the lateral less 3 percent to cover costs related to the operation of the lateral. This lease expense, totaling $0.9 million and $5.9 million for the three and nine months ended September 30, 2009, respectively, and $2.6 million and $7.6 million for the three and nine months ended September 30, 2008, respectively, is included in “Operation and maintenance expense” on the accompanying Consolidated Statements of Income. The lease was terminated on August 1, 2009.

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.

6. COMPREHENSIVE INCOME

Comprehensive income is as follows:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
	(Thousands of Dollars)
Net income	$	38,260		$	41,236		$	114,330		$	115,079
Amortization of cash flow hedges		(16	)		(16	)		(47	)		(47	)
Pension benefits:
Amortization of prior service cost		21			20			62			60
Amortization of net actuarial loss		898			356			2,687			1,068

Total comprehensive income	$	39,163		$	41,596		$	117,032		$	116,160

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

OUTLOOK

Our strategy to create value focuses on maximizing the contracted capacity on our pipeline by providing high quality, low cost natural gas transportation and storage services to our markets. We grow our business primarily through expansion projects that are designed to increase our access to natural gas supplies and to serve the demand growth in our markets.

CAPITAL PROJECTS

The pipeline projects listed below are significant future pipeline projects for which we have significant customer commitments.

Colorado Hub Connection Project

On June 1, 2009, we commenced construction of a new 27-mile, 24-inch diameter lateral to connect the Meeker/White River Hub near Meeker, Colorado to our mainline south of Rangely, Colorado. This project is referred to as the Colorado Hub Connection (CHC Project). It is estimated that the construction of the CHC Project will cost up to $60 million with service targeted to commence in November 2009. We will combine the lateral capacity with existing mainline capacity to provide approximately 363 thousand dekatherms (MDth) per day of firm transportation from various receipt points to delivery points on the mainline as far south as Ignacio, Colorado. Approximately 243 MDth per day of this capacity was originally held by Pan-Alberta Gas under a contract that would have terminated on October 31, 2012 and approximately 98 MDth per day was sold on a short-term basis.

In addition to providing greater opportunity for contract extensions for the short-term firm and Pan-Alberta capacity, the CHC Project provides direct access to additional natural gas supplies at the Meeker/White River Hub for our on-system and off-system markets. We have entered into transportation agreements for approximately 363 MDth per day of capacity with terms ranging between eight and fifteen years at maximum rates for all of the short-term firm and Pan-Alberta capacity resulting in the successful re-contracting of the capacity out to 2018 and beyond. In April 2009, the FERC issued a certificate approving the CHC Project, including the presumption of rolling in the costs of the project in any future rate case filed with the FERC.

Jackson Prairie Underground Expansion

The Jackson Prairie Storage Project, connected to our transmission system near Chehalis, Washington, is operated by Puget Sound Energy and is jointly owned by Puget Sound Energy, Avista Corporation and us. A phased capacity expansion is currently underway and a deliverability expansion was placed in service on November 1, 2008.

As a one-third owner of Jackson Prairie, in early 2006, we held an open season for a new firm storage service based on our 100 million cubic feet per day share of the planned 2008 deliverability expansion and approximately 1.2 billion cubic feet of our share of the working natural gas storage capacity expansion being developed over approximately a six-year period from 2007 through 2012.

As a result of the open season, four shippers have executed long-term service agreements for the full amount of incremental storage service offered at contract terms averaging 33 years. The firm service relating to storage capacity rights will be phased-in as the expanded working natural gas capacity is developed. Our one-third share of the deliverability expansion was placed in service on November 1, 2008 at a cost of approximately $16.0 million. Our estimated capital cost for the capacity expansion component of the new storage service is $6.1 million, primarily for base natural gas.

Sundance Trail Expansion

In May 2009, we filed an application with the FERC for the proposed Sundance Trail Expansion to construct approximately 16 miles of 30-inch loop between our existing Green River and Muddy Creek compressor stations in Wyoming as well as an upgrade to our existing Vernal compressor station, with service targeted to commence in November 2010. The total project is estimated to cost up to $65 million, including the cost of replacing the existing compression at Vernal, which will enhance the efficiency of our system. We

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executed a precedent agreement to provide 150 MDth per day of firm transportation service from the Greasewood and Meeker Hubs in Colorado for delivery to the Opal Hub in Wyoming. We have proposed to collect our maximum system rates, and are seeking approval from the FERC to roll-in the Sundance Trail Expansion costs in any future rate cases. FERC approval is expected by the end of 2009.

GENERAL

Unless indicated otherwise, the following discussion and analysis of results of operations and financial condition and liquidity should be read in conjunction with the consolidated financial statements and notes thereto included within Item 8 of our 2008 Annual Report on Form 10-K and with the consolidated financial statements and notes thereto contained within this document.

RESULTS OF OPERATIONS

ANALYSIS OF FINANCIAL RESULTS

This analysis discusses financial results of our operations for the three and nine-month periods ended September 30, 2009 and 2008. Changes in natural gas prices and transportation volumes have little impact on revenues, because under our rate design methodology, the majority of overall cost of service is recovered through firm capacity reservation charges in our transportation rates.

Three Months Ended September 30, 2009 Compared to Three Months Ended September 30, 2008

Our operating revenues decreased $1.9 million, or 2 percent. This decrease is primarily attributed to the termination of the Parachute Lateral lease agreement on August 1, 2009. The decrease in the Parachute Lateral lease revenues is substantially offset by a decrease in lease expense described below.

Our transportation service accounted for 95 percent and 96 percent of our operating revenues for the three-month periods ended September 30, 2009 and 2008, respectively. Additionally, gas storage service accounted for 4 percent and 3 percent of operating revenues for the three-month periods ended September 30, 2009 and 2008, respectively.

Operating expenses increased $2.0 million, or 4 percent. This increase is due primarily to i) higher pension expense of $1.0 million, ii) higher allocated overhead from Williams of $1.3 million attributed primarily to higher pension expense, and iii) higher contractual and outside services of $0.9 million attributed primarily to pipeline maintenance. These increases were partially offset by $1.7 million lower expense from the termination of the Parachute Lateral lease agreement.

Nine Months Ended September 30, 2009 Compared to Nine Months Ended September 30, 2008

Our operating revenues increased $3.5 million, or 1 percent. This increase is attributed to higher transportation revenues of $1.8 million resulting primarily from an increase in firm transportation under long-term contracts and higher storage revenues of $3.0 million resulting primarily from the release of capacity at Clay Basin and incremental reservation charges associated with the Jackson Prairie deliverability expansion that was placed in service on November 1, 2008, partially offset by $1.8 million lower revenues due to the termination of the Parachute Lateral lease agreement on August 1, 2009. The decrease in the Parachute Lateral lease revenues is substantially offset by a decrease in lease expense as described below.

Our transportation service accounted for 95 percent and 96 percent of our operating revenues for the nine-month periods ended September 30, 2009 and 2008, respectively. Additionally, gas storage service accounted for 4 percent and 3 percent of operating revenues for the nine-month periods ended September 30, 2009 and 2008, respectively.

Operating expenses increased $3.1 million, or 2 percent. This increase is due primarily to i) higher pension expense of $3.0 million, ii) higher allocated overhead from Williams of $1.7 million attributed primarily to higher pension expense, iii) higher contractual and outside services of $0.6 million and higher labor of $0.7 million attributed primarily to pipeline maintenance, and iv) higher employee group insurance expense of $0.8 million. These increases were partially offset by lower taxes, other than income taxes, of $2.3 million primarily

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attributed to lower than anticipated tax settlements and $1.7 million lower expense from the termination of the Parachute Lateral lease agreement.

Interest charges increased $1.7 million, or 5 percent, due primarily to the May 2008 refinancing of the $250.0 million revolver debt with the issuance of $250.0 million of 6.05 percent senior unsecured notes.

Operating Statistics

The following table summarizes volumes and capacity for the periods indicated:


	Three Months				Nine Months
	Ended				Ended
	September 30,				September 30,
	2009		2008		2009		2008
	(In Trillion British Thermal Units)
Total Throughput (1)		166		179		563		570

Average Daily Transportation Volumes		1.8		2.0		2.1		2.1
Average Daily Reserved Capacity Under Base Firm Contracts, excluding peak capacity		2.6		2.5		2.6		2.5
Average Daily Reserved Capacity Under Short- Term Firm Contracts (2)		0.5		0.6		0.5		0.7


(1)		Parachute Lateral volumes of 6 trillion British thermal units (TBtu) and 49 TBtu for the three and nine months ended September 30, 2009, respectively, and 26 TBtu and 75 TBtu for the three and nine months ended September 30, 2008, respectively, are excluded from total throughput as these volumes flowed under separate contracts that do not result in mainline throughput.

(2)		Includes additional capacity created from time to time through the installation of new receipt or delivery points or the segmentation of existing mainline capacity. Such capacity is generally marketed on a short-term firm basis.

CAPITAL RESOURCES AND LIQUIDITY

Our ability to finance our operations (including the funding of capital expenditures and acquisitions), to meet our debt obligations and to refinance indebtedness depends on our ability to generate future cash flows and to borrow funds. Our ability to generate cash is subject to a number of factors, some of which are beyond our control, including the impact of regulators’ decisions on the rates we are able to establish for our transportation and storage services.

On or before the end of the calendar month following each quarter, available cash is distributed to our partners as required by our general partnership agreement. Available cash is generally defined as the sum of all cash and cash equivalents on hand at the end of the quarter, plus cash on hand from working capital borrowings made subsequent to the end of that quarter (as determined by the management committee), less cash reserves established by the management committee as necessary or appropriate for the conduct of our business and to comply with any applicable law or agreements. In 2009, for the three-month periods ended December 31, 2008, March 31, 2009, and June 30, 2009, we declared and paid equity distributions of $32.0 million, $33.0 million and $35.0 million, respectively, to our partners. In October 2009, for the three-month period ended September 30, 2009, we declared equity distributions of $35.0 million to our partners, to be paid on October 30, 2009.

We fund our capital spending requirements with cash from operating activities, third party debt and contributions from our partners with the exception of the CHC Project, which is funded by capital contributions from Williams. Through September 30, 2009, we have received $35.7 million in capital contributions from Williams to fund the CHC Project.

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SOURCES (USES) OF CASH


	Nine Months Ended September 30,
	2009			2008
	(Thousands of Dollars)
Net cash provided (used) by:
Operating activities	$	194,567		$	190,331
Financing activities		(66,365	)		(94,714	)
Investing activities		(128,169	)		(95,863	)

Increase (decrease) in cash and cash equivalents	$	33		$	(246	)

Operating Activities

Our net cash provided by operating activities for the nine months ended September 30, 2009 increased $4.2 million from the same period in 2008. This increase is primarily attributed to changes in working capital and an increase in our cash operating results, partially offset by changes in other noncurrent assets and liabilities.

Financing Activities

Cash used in financing activities for the nine months ended September 30, 2009 decreased $28.3 million from the same period in 2008 due to lower distributions paid to our partners due to the absence of proceeds from the sale of partnership interests in 2008, a $34.1 million capital contribution for the CHC Project from our parent in 2009, lower cash overdrafts and the absence of the costs associated with the refinancing of the $250.0 million revolver debt with the issuance of $250.0 million of 6.05 percent senior unsecured notes in 2008.

Investing Activities

Cash used in investing activities for the nine months ended September 30, 2009 increased $32.3 million from the same period in 2008 due to increased capital expenditures, offset by lower advances to affiliates.

METHOD OF FINANCING

Working Capital

Working capital is the amount by which current assets exceed current liabilities. Our working capital requirements will be primarily driven by changes in accounts receivable and accounts payable. These changes are primarily impacted by such factors as credit and the timing of collections from customers and the level of spending for maintenance and expansion activity.

Changes in the terms of our transportation and storage arrangements have a direct impact on our generation and use of cash from operations due to their impact on net income, along with the resulting changes in working capital. A material adverse change in operations or available financing may impact our ability to fund our requirements for liquidity and capital resources.

In 2009, for the three-month periods ended December 31, 2008, March 31, 2009, and June 30, 2009, we made distributions of available cash of $32.0 million, $33.0 million, and $35.0 million, respectively, to our partners, representing cash in excess of working capital requirements and reserves established by the management committee as necessary for the conduct of our business.

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Short-Term Liquidity

We fund our working capital and capital requirements with cash flows from operating activities, and, if required, borrowings under the Williams Credit Facility (described below) and return of advances made to Williams.

We invest cash through participation in Williams’ cash management program. At September 30, 2009, the advances due to us by Williams totaled approximately $92.1 million. The advances are represented by one or more demand notes. The interest rate on these demand notes is based upon the overnight investment rate paid on Williams’ excess cash, which was approximately 0.13 percent at September 30, 2009.

Credit Agreement

Williams’ unsecured $1.5 billion revolving Credit Facility terminates in May 2012. We have access to $400 million under the Credit Facility to the extent not otherwise utilized by Williams. Interest is calculated based on a choice of two methods: a fluctuating rate equal to the lender’s base rate plus an applicable margin, or a periodic fixed rate equal to the London Interbank Offered Rate plus an applicable margin. Williams is required to pay a commitment fee (currently 0.125 percent per annum) based on the unused portion of the Credit Facility. The applicable margin is based on the specific borrower’s senior unsecured long-term debt ratings. As of September 30, 2009, there were no letters of credit issued by the participating institutions and no revolving credit loans outstanding.

Lehman Commercial Paper Inc., which is committed to fund up to $70 million of the Credit Facility, filed for bankruptcy in October of 2008. Williams expects that its ability to borrow under this facility is reduced by this committed amount. Consequently, we expect our ability to borrow under the Credit Facility is reduced by approximately $18.7 million. The committed amounts of other participating banks remain in effect and are not impacted by this reduction.

CAPITAL REQUIREMENTS

The transmission and storage business can be capital intensive, requiring significant investment to maintain and upgrade existing facilities and construct new facilities.

We anticipate 2009 capital expenditures will be between $125 million and $160 million. Of this total, $100 million to $135 million is considered nondiscretionary due to legal, regulatory and/or contractual requirements. Our gross expenditures for property, plant and equipment additions were $110.5 million and $57.7 million for the nine months ended September 30, 2009 and 2008, respectively. The $52.8 million increase is primarily attributed to expenditures related to the CHC Project.

CREDIT RATINGS

During the third quarter of 2009, the credit ratings on our senior unsecured long-term debt remained unchanged with investment grade ratings from all three agencies, as shown below.


Moody’s Investors Service		Baa2
Standard and Poor’s		BBB-
Fitch Ratings		BBB

At September 30, 2009, the evaluation of our credit rating is “stable” from all three agencies.

With respect to Moody’s, a rating of “Baa” or above indicates an investment grade rating. A rating below “Baa” is considered to have speculative elements. A “Ba” rating indicates an obligation that is judged to have speculative elements and is subject to substantial credit risk. The “1”, “2” and “3” modifiers show the relative standing within a major category. A “1” indicates that an obligation ranks in the higher end of the broad rating category, “2” indicates a mid-range ranking, and “3” indicates a ranking at the lower end of the category.

With respect to Standard and Poor’s, a rating of “BBB” or above indicates an investment grade rating. A rating below “BBB” indicates that the security has significant speculative characteristics. A “BB” rating indicates that Standard and Poor’s believes the issuer has the capacity to meet its financial commitment on the obligation, but adverse business conditions could lead to insufficient ability to meet financial commitments. Standard and Poor’s may modify its ratings with a “+” or a “-” sign to show the obligor’s relative standing within a major rating category.

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With respect to Fitch, a rating of “BBB” or above indicates an investment grade rating. A rating below “BBB” is considered speculative grade. A “BB” rating from Fitch indicates that there is a possibility of credit risk developing, particularly as the result of adverse economic change over time; however, business or financial alternatives may be available to allow financial commitments to be met. Fitch may add a “+” or a “-” sign to show the obligor’s relative standing within a major rating category.

OTHER

Off-Balance Sheet Arrangements

We have no guarantees of off-balance sheet debt to third parties and maintain no debt obligations that contain provisions requiring accelerated payment of the related obligations in the event of specified levels of declines in Williams’ or our credit ratings.

Impact of Inflation

We have generally experienced increased costs in recent years due to the effect of inflation on the cost of labor, benefits, materials and supplies, and property, plant and equipment. A portion of the increased labor and materials and supplies costs can directly affect income through increased operating and maintenance costs. The cumulative impact of inflation over a number of years has resulted in increased costs for current replacement of productive facilities. The majority of the costs related to our property, plant and equipment and materials and supplies is subject to rate-making treatment, and under current FERC practices, recovery is limited to historical costs. While amounts in excess of historical cost are not recoverable under current FERC practices, we believe we may be allowed to recover and earn a return based on the increased actual costs incurred when existing facilities are replaced. However, cost-based regulation along with competition and other market factors may limit our ability to price services or products to ensure recovery of inflation’s effect on costs.

Environmental Matters

Please see “Item 1. Financial Statements — Notes to Consolidated Financial Statements: Note 2. Contingent Liabilities and Commitments — Environmental Matters.”

Safety Matters

Please see “Item 1. Financial Statements — Notes to Consolidated Financial Statements: Note 2. Contingent Liabilities and Commitments — Safety Matters — Pipeline Integrity Regulations.”

Legal Matters

We are party to various legal actions arising in the normal course of business. Our management believes that the disposition of outstanding legal actions will not have a material adverse impact on our future liquidity or financial condition.

CONCLUSION

Although no assurances can be given, we currently believe that the aggregate of cash flows from operating activities, supplemented, when necessary, by advances or capital contributions from our partners and/or borrowings under the Credit Facility, will provide us with sufficient liquidity to meet our capital requirements. We anticipate that we will be able to access public and private debt markets on terms commensurate with our credit ratings to finance our capital requirements, when needed.

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Item 4T. Controls and Procedures

Our management, including our Senior Vice President and our Vice President and Treasurer, does not expect that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act) (Disclosure Controls) or our internal controls over financial reporting (Internal Controls) will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Northwest have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. We monitor our Disclosure Controls and Internal Controls and make modifications as necessary; our intent in this regard is that the Disclosure Controls and the Internal Controls will be modified as systems change and conditions warrant.

Evaluation of Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of our Disclosure Controls was performed as of the end of the period covered by this report. This evaluation was performed under the supervision and with the participation of our management, including our Senior Vice President and our Vice President and Treasurer. Based upon that evaluation, our Senior Vice President and our Vice President and Treasurer concluded that these Disclosure Controls are effective at a reasonable assurance level.

Third-Quarter 2009 Changes in Internal Controls

There have been no changes during the third quarter of 2009 that have materially affected, or are reasonably likely to materially affect, our Internal Controls.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS.

The information called for by this item is provided in Note 2. Contingent Liabilities and Commitments, included in the Notes to Consolidated Financial Statements included under Part I, Item 1. Financial Statements of this report, which information is incorporated by reference.

Item 1A. RISK FACTORS.

Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2008, includes certain risk factors that could materially affect our business, financial condition or future results. Those Risk Factors have not materially changed except as set forth below.

We are subject to risks associated with climate change.

There is a growing belief that emissions of greenhouse gases may be linked to climate change. Climate change and the costs that may be associated with its impacts and the regulation of greenhouse gases have the potential to affect our business in many ways, including negatively impacting the costs we incur in providing our products and services, the demand for and consumption of our products and services (due to change in both costs and weather patterns), and the economic health of the regions in which we operate, all of which can create financial risks.

Our operations are subject to governmental laws and regulations relating to the protection of the environment, including those relating to climate change, which may expose us to significant costs and liabilities and could exceed our current expectations.

Our natural gas transportation and storage operations are subject to extensive federal, state and local environmental laws and regulations governing environmental protection, the discharge of materials into the environment and the security of chemical and industrial facilities. For a description of these laws and regulations, please see “Part I, Item 1. Business — Regulatory Matters — Environmental Regulation” in our Annual Report on Form 10-K for the year ended December 31, 2008.

These laws and regulations may impose numerous obligations that are applicable to our operations including the acquisition of permits to conduct regulated activities, the incurrence of capital expenditures to limit or prevent releases of materials from our pipeline and facilities, and the imposition of substantial costs and penalties for spills, releases and emissions of various regulated substances into the environment resulting from those operations. Various governmental authorities, including the U.S. Environmental Protection Agency and analogous state agencies, and the United States Department of Homeland Security have the power to enforce compliance with these laws and regulations and the permits issued under them, oftentimes requiring difficult and costly actions. Failure to comply with these laws, regulations and permits may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial obligations, and the issuance of injunctions limiting or preventing some or all of our operations.

There is inherent risk of incurring significant environmental costs and liabilities in the operation of natural gas transportation and storage facilities due to the handling of petroleum hydrocarbons and wastes, the occurrence of air emissions and water discharges related to the operations, and historical industry operations and waste disposal practices. Joint and several, strict liability may be incurred without regard to fault under certain environmental laws and regulations, including the Federal Comprehensive Environmental Response, Compensation, and

Liability Act, the Federal Resource Conservation and Recovery Act and analogous state laws, in connection with spills or releases of natural gas and wastes on, under, or from our properties and facilities. Private parties, including the owners of properties through which our pipeline passes and facilities where our wastes are taken for reclamation or disposal, may have the right to pursue legal actions to enforce compliance as well as to seek damages for non-compliance with environmental laws and regulations or for personal injury or property damage. Our insurance may not cover all environmental risks and costs or may not provide sufficient coverage if an environmental claim is made against us.

Our business may be adversely affected by increased costs due to stricter pollution control requirements or liabilities resulting from non-compliance with required operating or other regulatory permits. Also, we might not be able to obtain or maintain from time to time all required environmental regulatory approvals for our operations. If there is a delay in obtaining any required environmental regulatory approvals, or if we fail to obtain and comply with them, the operation of our facilities could be prevented or become subject to additional costs resulting in potentially material adverse consequences to our business, financial condition, results of operations and cash flows.

We make assumptions and develop expectations about possible expenditures related to environmental conditions based on current laws and regulations and current interpretations of those laws and regulations. If the interpretation of laws or regulations, or the laws and regulations themselves, change, our assumptions may change, and any new capital costs incurred to comply with such changes may not be recoverable under our regulatory rate structure or our customer contracts. In addition, new environmental laws and regulations might adversely affect our activities, including storage and transportation, as well as waste management and air emissions. For instance, federal and state agencies could impose additional safety requirements, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may be subject to legislative and regulatory responses to climate change with which compliance may be costly.

Recent scientific studies have suggested that emissions of certain gases, commonly referred to as “greenhouse gases,” may be contributing to warming of the earth’s atmosphere, and various governmental bodies have considered legislative and regulatory responses in this area. Legislative and regulatory responses related to climate change create financial risk. The United States Congress and certain states have for some time been considering various forms of legislation related to greenhouse gas emissions. There have also been international efforts seeking legally binding reductions in emissions of greenhouse gases. In addition, increased public awareness and concern may result in more state, federal, and international proposals to reduce or mitigate the emission of greenhouse gases.

Several bills have been introduced in the United States Congress that would compel carbon dioxide emission reductions. On June 26, 2009, the U.S. House of Representatives passed the “American Clean Energy and Security Act” which is intended to decrease annual greenhouse gas emissions through a variety of measures, including a “cap and trade” system which limits the amount of greenhouse gases that may be emitted and incentives to reduce the nation’s dependence on traditional energy sources. The U.S. Senate is currently considering similar legislation, and numerous states have also announced or adopted programs to stabilize and reduce greenhouse gases. While it is not clear whether any federal climate change law will be passed this year, any of these actions could result in increased costs to (i) operate and maintain our facilities, (ii) install new emission controls on our facilities, and (iii) administer and manage any greenhouse gas emissions program. If we are unable to recover or pass through a significant level of our costs related to complying with climate change regulatory requirements imposed on us, it could have a material adverse effect on our results of operations. To the extent financial markets view climate change and emissions of greenhouse gases as a financial risk, this could negatively impact our cost of and access to capital.

Our assets and operations can be affected by weather and other natural phenomena.

Our assets and operations can be adversely affected by hurricanes, floods, earthquakes, tornadoes and other natural phenomena and weather conditions, including extreme temperatures, making it more difficult for us to realize the historic rates of return associated with these assets and operations. Insurance may be inadequate, and in some instances, we may be unable to obtain insurance on commercially reasonable terms, if at all. A significant disruption in operations or a significant liability for which we were not fully insured could have a material adverse effect on our business, results of operations and financial condition.

Our customers’ energy needs vary with weather conditions. To the extent weather conditions are affected by climate change or demand is impacted by regulations associated with climate change, customers’ energy use could increase or decrease depending on the duration and magnitude of the changes, leading either to increased investment or decreased revenues.

Item 6. EXHIBITS.

The following instruments are included as exhibits to this report.


Exhibit Number		Description
3.1		Statement of Partnership Existence of Northwest Pipeline GP (Exhibit 3.1 to Northwest report on Form 8-K, No. 1-7414, filed October 2, 2007).

3.2		Amended and Restated General Partnership Agreement of Northwest Pipeline GP (Exhibit 3.1 to Northwest report on Form 8-K, No. 1-7414, filed January 30, 2008).

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.

32.1*		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.


*		Filed herewith.

EXHIBIT INDEX


Exhibit Number		Description
3.1		Statement of Partnership Existence of Northwest Pipeline GP (Exhibit 3.1 to Northwest report on Form 8-K, No. 1-7414, filed October 2, 2007).

3.2		Amended and Restated General Partnership Agreement of Northwest Pipeline GP (Exhibit 3.1 to Northwest report on Form 8-K, No. 1-7414, filed January 30, 2008).

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.

32.1*		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.


*		Filed herewith.


	September 30,		December 31,
	2009		2008
	(Unaudited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	378	$	345
Advances to affiliates		92,118		65,977
Accounts receivable —
Trade		36,934		40,116
Affiliated companies		571		1,230
Materials and supplies, less reserves of $105 for September 30, 2009 and $111 for December 31, 2008		9,910		9,817
Exchange gas due from others		3,188		17,000
Exchange gas offset		3,387		—
Prepayments and other		5,324		5,985


Total current assets		151,810		140,470


PROPERTY, PLANT AND EQUIPMENT, at cost		2,849,638		2,765,520
Less — Accumulated depreciation		938,108		901,613


Total property, plant and equipment, net		1,911,530		1,863,907


OTHER ASSETS:
Deferred charges		18,962		22,213
Regulatory assets		57,416		55,582


Total other assets		76,378		77,795


Total assets	$	2,139,718	$	2,082,172


	September 30,			December 31,
	2009			2008
	(Unaudited)
LIABILITIES AND OWNERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable-
Trade	$	26,469		$	12,172
Affiliated companies		6,863			6,484
Accrued liabilities —
Taxes, other than income taxes		12,787			10,019
Interest		15,155			4,045
Employee costs		7,798			10,505
Exchange gas due to others		6,575			12,165
Exchange gas offset		—			4,835
Other		5,311			8,784


Total current liabilities		80,958			69,009


LONG-TERM DEBT		693,388			693,240

DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES		129,577			135,209

CONTINGENT LIABILITIES AND COMMITMENTS (Note 2)

OWNERS’ EQUITY:
Owners’ capital		1,012,732			978,682
Retained earnings		279,998			265,668
Accumulated other comprehensive loss		(56,935	)		(59,636	)


Total owners’ equity		1,235,795			1,184,714


Total liabilities and owners’ equity	$	2,139,718		$	2,082,172


				NORTHWEST PIPELINE GP Registrant

		By:		/s/ R. Rand Clark

				R. Rand Clark
				Controller
				(Duly Authorized Officer and Chief Accounting Officer)

	(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

	(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

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1.		I have reviewed this quarterly report on Form 10-Q of Northwest Pipeline GP;

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)		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.


	/s/ Phillip D. Wright
	Phillip D. Wright
	Senior Vice President (Principal Executive Officer)


	/s/ Richard D. Rodekohr
	Richard D. Rodekohr
	Vice President and Treasurer (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/ Phillip D. Wright Phillip D. Wright
Senior Vice President
(Principal Executive Officer)
October 29, 2009

/s/ Richard D. Rodekohr Richard D. Rodekohr
Vice President and Treasurer
(Principal Financial Officer)
October 29, 2009