Transactions With Major Customers and Affiliates

12 Months Ended

Dec. 31, 2012

Transactions With Major Customers And Affiliates [Abstract]

Transactions With Major Customers And Affiliates [Text Block]

7. 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,
	2012		2011		2010
	(Thousands of Dollars)
Puget Sound Energy, Inc.	$	100,799	$	99,116	$	95,564
Northwest Natural Gas Co.		47,297		47,322		48,022

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, 2012 and 2011, the advances due to us by WPZ totaled approximately $29.3 million and $52.0 million, respectively. These advances are represented by demand notes. The interest rate on these intercompany demand notes is based upon the daily overnight investment rate paid on WPZ's excess cash at the end of each month, which was approximately 0.01 percent at December 31, 2012. The interest income from these advances was minimal during the years ended December 31,2012, 2011, and 2010.Such interest income is included in “Other (Income) and Other Deductions: Miscellaneous other (income) deductions, net” on the accompanying Statement of Comprehensive Income.

Williams charges its subsidiary companies for management services provided by it and other affiliated companies. Such corporate expenses charged by Williams, WPZ, and other affiliated companies, for the years ended December 31,2012, 2011, and 2010, were $44.0 million, $35.4 million, and $34.1 million, respectively. These expenses are included in “General and administrative” expense on the accompanying Statement of Comprehensive Income. Management considers the cost of these services to be reasonable.

We have no employees. Services necessary to operate our business are provided to us by Williams and certain affiliates of Williams. In return, we reimburse Williams for all direct and indirect expenses it incurs or payments it makes (including salary, bonus, incentive compensation, pension and other benefits) in connection with these services. For the years ended December 31,2012, 2011 and 2010, we were billed $69.0 million, $62.6 million, and $60.6 million, respectively. Such expenses are primarily included in “General and administrative” and “Operation and maintenance” expenses on the accompanying Statement of Comprehensive Income.

During the periods presented, our revenues include transportation transactions and rental of communication facilities with subsidiaries of Williams. Combined revenues for these activities, for the year ended December 31, 2012, were minimal. Combined revenues for these activities, for the years ended December 31,2011 and 2010, were $24.7 million and $6.8 million, respectively. The reduction in revenues from 2011 is a result of Williams' spin-off of its former exploration and production business, which was completed on December 31, 2011. These revenues, associated with transportation transactions, are now reflected with the revenues from outside parties.

During 2012, 2011, and 2010, we declared and paid equity distributions to our parent of $137.5 million, $127.0 million, and $191.5 million, respectively.

During 2012, 2011, and 2010, we received contributions of $8.6 million, $5.1 million, and $19.0 millionfrom our parent to fund a portion of our expenditures for additions to property, plant, and equipment.

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.