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.

Major Customers.

Operating revenues received from our two major customers in 2012, 2011 and 2010 are as follows (in millions):

	2012		2011		2010
Public Service Enterprise Group	$	127.4	$	136.7	$	130.0
National Grid		93.5		98.2		115.1

Affiliates.

       We are a participant in WPZ's cash management program, and we make advances to and receive advances from WPZ. At December 31, 2012 and 2011, the advances due us by WPZ totaled approximately $312.2 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 December 31, 2012, 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 for the years 2011 and 2010 are amounts related to activity with WPX.

Included in our operating revenues for 2012, 2011 and 2010 are revenues received from affiliates of $17.0 million, $18.5 million, and $23.4 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 2012, 2011 and 2010 is purchased gas cost from affiliates of $3.9 million, $8.8 million, and $4.8 million, 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 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 $206.1 million, $191.1 million and $170.7 million during 2012, 2011 and 2010, respectively, for these services. Such expenses are primarily included in Administrative and general and Operation and maintenance expenses in the accompanying Consolidated Statement of Comprehensive Income.

Employees of Williams also provide general and administrative 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. Our share of direct and allocated administrative expenses is reflected in general and administrative expenses in the Consolidated Statement of Comprehensive Income. 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.Included in our administrative and general expenses for 2012, 2011 and 2010 were $75.6 million, $52.6 million, and $54.7 million, respectively, for management services charged by Williams and other affiliated companies.

       Pursuant to an operating agreement, we serve as contract operator on certain Williams Field Services (WFS) facilities. We recorded reductions in operating expenses for services provided to and reimbursed by WFS of $4.5 million, $6.4 million, and $8.7 million in 2012, 2011 and 2010, respectively, under terms of the operating agreement. Pursuant to construction agreements, we received pre-payments from WFS of $2.3 million, $4.5 million and $13.5 million during 2012, 2011 and 2010, respectively, associated with capital projects. We received reimbursements totaling $3.1 million from Williams Gas Processing – Gulf Coast Company, L.P. in 2012 associated with costs related to a transfer and assignment agreement.

       We made equity distributions of $246 million, $219 million and $334 million during 2012, 2011 and 2010, respectively. In January 2013, an additional distribution of $65 million was declared and paid.

During 2012, 2011 and 2010, WPO made contributions totaling $150 million, $115 million and $75 million, respectively, to us to fund a portion of our expenditures for additions to property, plant and equipment. In January 2013, WPO made an additional $55 million contribution. During 2012, we received a non-cash contribution of $1.5 million from WPO. During 2011, we made a non-cash return of capital to WPO of approximately $0.5 million.