Transactions with Affiliates

6 Months Ended

Jun. 30, 2012

Transactions With Affiliates [Abstract]

TRANSACTIONS WITH AFFLIATES

6. TRANSACTIONS WITH AFFILIATES.

We are a participant in WPZ's cash management program, and we make advances to and receive advances from WPZ. At June 30, 2012 and December 31, 2011, the advances due us by WPZ totaled approximately $286.0 million and $253.6 million, respectively. These 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 June 30, 2012, the interest rate was 0.01 percent.

       Included in our operating revenues for the six months ending June 30, 2012 and 2011 are revenues received from affiliates of $1.1 million and $9.9 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.

       Included in our cost of sales for the six months ended June 30, 2012 and 2011 is purchased gas cost from affiliates of $2.4 million and $4.5 million, respectively. All gas purchases are made at market or contract prices.

       Williams has a policy of charging its subsidiary companies for management services provided by the parent company and other affiliated companies. Included in our administrative and general expenses for the six months ended June 30, 2012 and 2011, are $36.1 million and $27.0 million, respectively, for such corporate expenses charged by Williams, WPZ, and other affiliated companies.

       Pursuant to an operating agreement, we serve as contract operator on certain Williams Field Services Company (WFS) facilities. Transco recorded reductions in operating expenses for services provided to and reimbursed by WFS of $1.6 million and $2.1 million for the six months ended June 30, 2012 and 2011, respectively, under terms of the operating agreement.

We made equity distributions to WPO totaling $136.3 million and $101.0 million during the six months ended June 30,2012 and 2011, respectively. During July 2012, we made an additional distribution of $60.0 million.In the six months ended June 30,2012 and 2011, respectively, WPO made contributions totaling $69.0 million and $86.0 million to us to fund a portion of our expenditures for additions to property, plant and equipment. In July 2012, WPO made an additional $48.0 million contribution.

       We have no employees. Services are provided to us by an affiliate, Transco Pipeline Services LLC (TPS), a Delaware limited liability company. Pursuant to an administrative services agreement, 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, incentive compensation and benefits) in connection with these services.We were billed $101.9 million and $95.2 million in the six months ended June 30,2012 and 2011, respectively, for these services. Such expenses are primarily included in Administrative and general and Operation and maintenance expenses on the accompanying Condensed Consolidated Statement of Comprehensive Income.