Transactions with Affiliates (Notes)

3 Months Ended

Mar. 31, 2024

Related Party Transactions [Abstract]

Transactions with Affiliates

Transactions with Affiliates

We are a participant in Williams’ cash management program, and we make advances to and receive advances from Williams. Our advances to Williams totaled approximately $1.2 billion and $1.4 billion at March 31, 2024 and December 31, 2023, respectively. These advances are represented by demand notes and are classified as Receivables - Advances to affiliate on the Balance Sheet. 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 approximately 5.2 percent at March 31, 2024. The interest income from these advances was $16.0 million and $19.3 million for the three months ended March 31, 2024 and 2023, respectively. Such interest income is included in Other (Income) and Other Expenses - Interest income on the Statement of Net Income.

Included in Operating Revenues on the Statement of Net Income are revenues received from affiliates of $18.6 million and $12.2 million for the three months ended March 31, 2024 and 2023, respectively.

Included in Cost of natural gas sales on the Statement of Net Income are costs of gas purchased from affiliates of $2.0 million and $3.4 million for the three months ended March 31, 2024 and 2023, respectively. All gas purchases are made at market or contract prices.

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 $84.5 million and $84.1 million for the three months ended March 31, 2024 and 2023, respectively, for these service expenses, which are primarily included in Operation and maintenance and General and administrative expenses on the Statement of Net Income.

We provide services to certain of our affiliates. We recorded reductions in operating expenses for services provided to and reimbursed by our affiliates of $2.3 million and $2.8 million for the three months ended March 31, 2024 and 2023, respectively.

During April 2024, we declared and paid a cash distribution of $330 million to our parent.