Transactions with Major Customers and Affiliates

12 Months Ended

Dec. 31, 2011

Transactions With Major Customers And Affiliates [Abstract]

TRANSACTIONS WITH MAJOR CUSTOMERS AND AFFILIATES

7. TRANSACTIONS WITH MAJOR CUSTOMERS AND AFFILIATES.

Major Customers.

Operating revenues received from our three major customers in 2011, 2010 and 2009 are as follows (in millions):

	2011		2010		2009
Public Service Enterprise Group	$	136.7	$	130.0	$	111.4
National Grid		98.2		115.1		120.3
Piedmont Natural Gas Company		83.0		85.6		78.4

Affiliates.

       Prior to Williams' restructuring in February 2010, we were a participant in Williams' cash management program, whereby we made advances to and received advances from Williams. The interest rate on these intercompany demand notes was based upon the weighted average cost of William's debt outstanding at the end of each quarter. In accordance with Williams' restructuring of its business, our participation in the Williams' cash management program terminated on February 28, 2010. We received interest income from advances to Williams of $2.2 million, and $19.1 million during 2010 and 2009, respectively.

Subsequent to Williams' restructuring in February 2010, we became a participant in WPZ's cash management program, and we make advances to and receive advances from WPZ. At December 31, 2011, the advances due us by WPZ totaled approximately $253.6 million. The advances are represented by demand notes. Advances are stated at the historical carrying amounts. Interest income is recognized when chargeable and collectability is reasonably assured. 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. At December 31, 2011, the interest rate was 0.01 percent.

On December 31, 2011, Williams completed the spin-off of its former exploration and production business, WPX, by means of a special stock dividend to its shareholders. Included in our operating revenues and cost of sales listed below are amounts related to activity with WPX.

Included in our operating revenues for 2011, 2010 and 2009 are revenues received from affiliates of $18.5 million, $23.4 million, and $21.9 million, respectively. The rates charged to provide sales and services to affiliates are the same as those that are charged to similarly-situated nonaffiliated customers.

Through an agency agreement with us, WPXEM managed our jurisdictional merchant gas sales until December 31, 2011. Subsequent to the spinoff of WPX by Williams, our merchant function will be managed by WER, our affiliate.

       Included in our cost of sales for 2011, 2010 and 2009 is purchased gas cost from affiliates of $8.8 million, $4.8 million, and $5.2 million, respectively. All gas purchases are made at market or contract prices.

Williams has a policy of charging subsidiary companies for management services provided by the parent company and other affiliated companies. Included in our administrative and general expenses for 2011, 2010 and 2009 were $52.6 million, $54.7 million, and $53.3 million, respectively, for such corporate expenses charged by Williams and other affiliated companies. Management considers the cost of these services to be reasonable.

       Pursuant to an operating agreement, we serve as contract operator on certain Williams Field Services (WFS) facilities. Transco recorded reductions in operating expenses for services provided to and reimbursed by WFS of $6.4 million, $8.7 million, and $9.1 million in 2011, 2010 and 2009 respectively, under terms of the operating agreement. Pursuant to construction agreements, Transco received pre-payments from WFS of $0.1 million and $8.1 million during 2011 and 2010, respectively, for the modification of the North Markham lateral and tie-in to WFS, and $4.4 million and $5.4 million during 2011 and 2010, respectively, for construction of the Lower Demunds meter station.

Effective December 1, 2011, we transferred certain Central Louisiana gathering facilities to Williams Gas Processing – Gulf Coast Company, L.P. (Gas Processing) implementing a FERC order authorizing abandonment dated August 31, 2001 (Docket No. CP01-368, et al).The value of the assets transferred was $3.0 million consisting of our FERC basis net book value of $2.5 million payable by Gas Processing and a non-cash distribution from us to WPO of $0.5 million. We recorded a loss of $1.4 million associated with the transfer.

       We made equity distributions of $219 million, $334 million and $145 million during 2011, 2010 and 2009, respectively.

       During 2011 and 2010, WPO made contributions totaling $115 million and $75 million, respectively, to us to fund a portion of our expenditures for additions to property, plant and equipment.

We have no employees. Services are provided to us by an affiliate, Transco Pipeline Services LLC (TPS), a Delaware limited liability company. On February 17, 2010, we entered into an administrative services agreement pursuant to which TPS provides personnel, facilities, goods and equipment not otherwise provided by us that are necessary to operate our business. In return, we reimburse TPS for all direct and indirect expenses it incurs or payments it makes (including salary, bonus, incentive compensation and benefits) in connection with these services. We were billed $191.1 million and $170.7 million during 2011 and 2010, respectively, for these services. Such expenses are primarily included in Administrative and general and Operation and maintenance expenses on the accompanying Consolidated Statement of Income.