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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20152016
ORor
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number 1-7414
 
NORTHWEST PIPELINE LLC
(Exact name of registrant as specified in its charter)
 
DELAWARE 26-1157701
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
   
295 Chipeta Way
Salt Lake City, Utah
 84108
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (801) 583-8800
NO CHANGE
(Former name, former address, and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ¨ Accelerated filer ¨
      
Non-accelerated filer 
þ  (Do not check if a smaller reporting company)
 Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION (H)(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM 10-Q WITH THE REDUCED DISCLOSURE FORMAT.

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NORTHWEST PIPELINE LLC
FORM 10-Q
INDEX
 
 Page
PART I. FINANCIAL INFORMATION:
 
  
Item 1. Financial Statements -
 
  
Statement of Comprehensive Income — Three and NineSix Months Ended SeptemberJune 30, 20152016 and 20142015
1
  
Balance Sheet — SeptemberJune 30, 20152016 and December 31, 20142015
2
  
Statement of Cash Flows — NineSix Months Ended SeptemberJune 30, 20152016 and 20142015
4
  
Notes to Financial Statements
5
  
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
9
  
Item 4. Controls and Procedures
10
  
PART II. OTHER INFORMATION:
 
  
Item 1. Legal Proceedings
11
Item 1A. Risk Factors
11
  
Item 6. Exhibits
1112
Forward-Looking Statements
Certain matters contained in this report includeThe reports, filings, and other public announcements of Northwest Pipeline LLC, may contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended.amended (Exchange Act). These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions, and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995.
All statements, other than statements of historical facts, included in this report that address activities, events, or developments that we expect, believe, or anticipate will exist or may occur in the future are forward-looking statements. Forward-looking statements can be identified by various forms of words or phrases such as “anticipates,” “believes,” “seeks,” “could,” “may,” “should,” “continues,” “estimates,” “expects,” “assumes,” “forecasts,” “intends,” “might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,” “will,” “guidance,” “outlook,” “in service date,” or other similar expressions. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to management and include, among others, statements regarding:
Amounts and nature of future capital expenditures;
Expansion and growth of our business and operations;
Financial condition and liquidity;
Business strategy;
Cash flow from operations or results of operations;
Rate case filings;
Natural gas prices, supply, and demand; and
Demand for our services.
Forward-looking statements are based on numerous assumptions, uncertainties, and risks that could cause future events or results to be materially different from those stated or implied in this report. Many of the factors that will determine these results

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are beyond our ability to control or predict. Specific factors that could cause actual results to differ from results contemplated by the forward-looking statements include, among others, the following:

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Availability of supplies and market demand,demand;
Volatility of pricing including the effect of lower than anticipated energy commodity prices and volatility of prices;margins;
Inflation, interest rates, and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on our customers and suppliers);
The strength and financial resources of our competitors and the effects of competition;
Whether we are able to successfully identify, evaluate, and timely execute our capital projects and other investment opportunities;opportunities in accordance with our forecasted capital expenditures budget;
Our ability to successfully expand our facilities and operations;
Development of alternative energy sources;
TheAvailability of adequate insurance coverage and the impact of operational and developmentdevelopmental hazards and unforeseen interruptions;
CostsThe impact of changes in, orexisting and future laws, regulations, the results of laws, government regulations (including safety and environmental regulations),regulatory environment, environmental liabilities, and litigation as well as our ability to obtain permits and achieve favorable rate proceedings;proceeding outcomes;
Our allocated costs for defined benefit pension plans and other postretirement benefit plans sponsored by our affiliates;
Changes in maintenance and construction costs;
Changes in the current geopolitical situation;
Our exposure to the credit risks of our customers and counterparties;
Risks related to financing, including restrictions stemming from our debt agreements, future changes in our credit ratings, and the availability and cost of capital;
Risks associated with weather and natural phenomenon,phenomena, including climate conditions;conditions and physical damage to our facilities;
Acts of terrorism, including cybersecurity threats and related disruptions; and
Additional risks described in our filings with the Securities and Exchange Commission (SEC).
Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, we caution investors not to unduly rely on our forward-looking statements. We disclaim any obligations to and do not intend to update the above list or to announce publicly any revisions to any of the forward-looking statements to reflect future events or developments. 

In addition to causing our actual results to differ, the factors listed above and referred to below may cause our intentions to change from those statements of intention set forth in this report. Such changes in our intentions may also cause our results to differ. We may change our intentions, at any time and without notice, based upon changes in such factors, our assumptions, or otherwise.
Because forward-looking statements involve risks and uncertainties, we caution that there are important factors, in addition to those listed above, that may cause actual results to differ materially from those contained in the forward-looking statements. For a detailed discussion of those factors, see Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 20142015. and in Part II, Item 1A. Risk Factors in this Quarterly Report on Form 10-Q.



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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.

NORTHWEST PIPELINE LLC
STATEMENT OF COMPREHENSIVE INCOME
(Thousands of Dollars)
(Unaudited)
 
 Three months ended 
 September 30,		 Nine months ended 
 September 30,		 Three months ended 
 June 30,		 Six months ended 
 June 30,
 2015 2014 2015 2014 2016 2015 2016 2015
OPERATING REVENUES $116,933
 $116,249
 $352,143
 $349,978
 $115,569
 $115,946
 $236,017
 $235,210
OPERATING EXPENSES:                
General and administrative 13,714
 14,244
 42,913
 45,688
 13,038
 14,276
 26,865
 29,199
Operation and maintenance 19,160
 16,902
 54,477
 53,953
 21,231
 18,168
 38,483
 35,317
Depreciation 25,190
 24,704
 75,349
 74,102
 25,414
 25,078
 50,729
 50,159
Regulatory debits 574
 369
 1,758
 1,131
 871
 586
 1,720
 1,184
Taxes, other than income taxes 3,995
 4,027
 12,907
 13,173
 4,312
 4,551
 8,664
 8,912
Total operating expenses 62,633
 60,246
 187,404
 188,047
 64,866
 62,659
 126,461
 124,771
OPERATING INCOME 54,300
 56,003
 164,739
 161,931
 50,703
 53,287
 109,556
 110,439
OTHER (INCOME) AND OTHER EXPENSES:                
Interest expense 11,506
 11,524
 34,525
 34,584
 10,952
 11,511
 22,429
 23,019
Allowance for equity and borrowed funds used during construction (556) (233) (1,027) (481) (242) (332) (625) (471)
Miscellaneous other (income) expenses, net 40
 224
 (586) 201
 31
 (1) 669
 (626)
Total other (income) and other expenses 10,990
 11,515
 32,912
 34,304
 10,741
 11,178
 22,473
 21,922
NET INCOME 43,310
 44,488
 131,827
 127,627
 39,962
 42,109
 87,083
 88,517
CASH FLOW HEDGES:                
Amortization of cash flow hedges into Interest expense
 (15) (15) (46) (46) (13) (16) (28) (31)
COMPREHENSIVE INCOME $43,295
 $44,473
 $131,781
 $127,581
 $39,949
 $42,093
 $87,055
 $88,486
See accompanying notes.


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NORTHWEST PIPELINE LLC
BALANCE SHEET
(Thousands of Dollars)
(Unaudited)
 
 September 30,
2015		 December 31,
2014		 June 30,
2016		 December 31,
2015
ASSETS        
CURRENT ASSETS:        
Cash $140
 $154
 $—
 $169
Receivables:        
Trade 39,282
 42,759
 38,634
 42,669
Affiliated companies 1,493
 2,039
 1,659
 1,441
Advances to affiliate 187,358
 135,054
 36,468
 171,867
Other 2,981
 1,249
 10,559
 14,051
Materials and supplies 10,214
 10,066
 10,180
 10,183
Exchange gas due from others 1,935
 4,184
 1,594
 3,733
Exchange gas offset 1,852
 —
 —
 201
Prepayments and other 6,509
 4,881
 6,266
 6,164
Total current assets 251,764
 200,386
 105,360
 250,478
PROPERTY, PLANT AND EQUIPMENT, at cost 3,297,996
 3,269,617
 3,324,778
 3,306,205
Less-Accumulated depreciation 1,354,632
 1,288,530
 1,410,668
 1,367,632
Total property, plant and equipment, net 1,943,364
 1,981,087
 1,914,110
 1,938,573
OTHER ASSETS:        
Deferred charges 3,700
 4,700
 1,953
 2,110
Regulatory assets 44,703
 49,923
 37,258
 40,853
Total other assets 48,403
 54,623
 39,211
 42,963
Total assets $2,243,531
 $2,236,096
 $2,058,681
 $2,232,014
See accompanying notes.

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NORTHWEST PIPELINE LLC
BALANCE SHEET
(Thousands of Dollars)
(Unaudited)
 

 September 30,
2015		 December 31,
2014		 June 30,
2016		 December 31,
2015
LIABILITIES AND OWNER’S EQUITY        
CURRENT LIABILITIES:        
Payables:        
Trade $21,094
 $12,709
 $16,959
 $14,363
Affiliated companies 8,742
 13,143
 6,483
 11,959
Accrued liabilities:        
Taxes, other than income taxes 16,404
 11,246
 12,387
 11,033
Interest 15,155
 4,045
 3,501
 4,045
Exchange gas due to others 2,667
 6,406
 1,456
 2,252
Exchange gas offset —
 3,941
 631
 —
Customer advances 5,139
 2,363
 2,046
 5,573
Other 2,207
 1,799
 4,653
 3,417
Long-term debt due within one year 174,961
 —
 184,843
 174,837
Total current liabilities 246,369
 55,652
 232,959
 227,479
LONG-TERM DEBT 519,607
 694,420
 334,028
 518,583
OTHER NONCURRENT LIABILITIES:        
Asset retirement obligations 80,596
 94,678
 85,286
 82,454
Regulatory liabilities 25,945
 23,375
 28,694
 26,802
Other 8,279
 8,017
 6,071
 6,108
Total other noncurrent liabilities 114,820
 126,070
 120,051
 115,364
CONTINGENT LIABILITIES AND COMMITMENTS (Note 2) 
 
 
 
OWNER’S EQUITY:        
Owner’s capital 1,073,892
 1,073,892
 1,073,892
 1,073,892
Retained earnings 288,799
 285,972
 297,751
 296,668
Accumulated other comprehensive income 44
 90
 —
 28
Total owner’s equity 1,362,735
 1,359,954
 1,371,643
 1,370,588
Total liabilities and owner’s equity $2,243,531
 $2,236,096
 $2,058,681
 $2,232,014
See accompanying notes.


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NORTHWEST PIPELINE LLC
STATEMENT OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
 
 Nine months ended September 30, Six months ended June 30,
 2015 2014 2016 2015
OPERATING ACTIVITIES:        
Net income $131,827
 $127,627
 $87,083
 $88,517
Adjustments to reconcile net income to net cash provided by (used in) operating activities:        
Depreciation 75,349
 74,102
 50,729
 50,159
Regulatory debits 1,758
 1,131
 1,720
 1,184
Gain on sale of property, plant and equipment —
 (70)
Amortization of deferred charges and credits 440
 715
 (190) 685
Allowance for equity funds used during construction (697) (328) (431) (320)
Changes in current assets and liabilities:        
Trade and other accounts receivable 1,745
 (678) 3,221
 3,854
Affiliated receivables 546
 36,064
 (218) 529
Exchange gas due from others 7,693
 (236) 658
 1,600
Materials and supplies (148) 174
 3
 (75)
Other current assets (1,628) 601
 (102) (2,752)
Trade accounts payable (304) (6,742) 799
 2,580
Affiliated payables (4,401) (1,597) (5,476) (4,548)
Exchange gas due to others (7,680) 928
 (658) (1,586)
Other accrued liabilities 19,545
 15,405
 (1,324) 1,850
Changes in noncurrent assets and liabilities:        
Deferred charges (3,446) (2,537) (2,900) (2,076)
Noncurrent liabilities 8,610
 6,779
 5,697
 6,134
Net cash provided by operating activities 229,209
 251,338
 138,611
 145,735
FINANCING ACTIVITIES:        
Payments of long-term debt (175,000) —
Cash distributions to parent (129,000) (191,000) (86,000) (88,000)
Other (338) 1,415
 —
 (162)
Net cash used in financing activities (129,338) (189,585) (261,000) (88,162)
INVESTING ACTIVITIES:        
Property, plant and equipment:      �� 
Capital expenditures, net of equity AFUDC* (50,599) (50,994) (22,843) (34,353)
Contributions and advances for construction costs 1,323
 2,180
 252
 1,137
Disposal of property, plant and equipment, net 1,695
 5,841
 (364) 1,771
Advances to affiliates, net (52,304) (18,785) 135,399
 (26,093)
Net cash used in investing activities (99,885) (61,758)
NET DECREASE IN CASH (14) (5)
Proceeds from insurance 9,776
 —
Net cash provided by (used in) investing activities 122,220
 (57,538)
NET INCREASE (DECREASE) IN CASH (169) 35
CASH AT BEGINNING OF PERIOD 154
 133
 169
 154
CASH AT END OF PERIOD $140
 $128
 $—
 $189
____________________________________        
* Increases to property, plant and equipment $(58,980) $(50,109) $(18,451) $(31,552)
Changes in related accounts payable and accrued liabilities 8,381
 (885)
Changes in related accounts receivable, accounts payable, and accrued liabilities (4,392) (2,801)
Capital expenditures, net of equity AFUDC $(50,599) $(50,994) $(22,843) $(34,353)
See accompanying notes.

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NORTHWEST PIPELINE LLC
NOTES TO FINANCIAL STATEMENTS
(Unaudited)




1. BASIS OF PRESENTATION
Northwest Pipeline LLC (Northwest) is indirectly owned by Williams Partners L.P. (WPZ), a publicly traded Delaware limited partnership, which is consolidated by The Williams Companies, Inc. (Williams). On February 2, 2015, WPZ was merged into Access Midstream Partners, L.P. (ACMP), another publicly traded limited partnership consolidated by Williams. ACMP was the surviving partnership and was subsequently renamed Williams Partners L.P.WPZ. At SeptemberJune 30, 20152016, Williams holds an approximate 60 percent interest in WPZ, comprised of an approximate 58 percent limited partner interest and all of the 2 percent general partner interest.
On September 28, 2015, Williams publicly announced in a press release that it had entered into an Agreement and Plan of Merger (Merger Agreement) with Energy Transfer Equity, L.P. (Energy Transfer) and certain of its affiliates. The Merger Agreement providesprovided that, subject to the satisfaction of customary closing conditions, Williams willwould be merged with and into the newly formed Energy Transfer Corp LP (ETC) (ETC Merger), with ETC surviving the ETC Merger. Energy Transfer formed ETC as a limited partnership that willwould be treated as a corporation for U.S. federal income tax purposes. Immediately following the completion of the ETC Merger, ETC willwould contribute to Energy Transfer all of the assets and liabilities of Williams in exchange for the issuance by Energy Transfer to ETC of a number of Energy Transfer Class E common units equal to the number of ETC common shares issued to Williams stockholders in the ETC Merger. WPZ expects to retain its current name and remain a publicly traded limited partnership following
On June 29, 2016, Energy Transfer provided Williams written notice terminating the ETC Merger.Merger Agreement, citing the alleged failure of certain conditions under the Merger Agreement.
In this report, Northwest is at times referred to in the first person as “we,” “us,” or “our.”
General
The accompanying interim financial statements do not include all the notes in our annual financial statements, and therefore, should be read in conjunction with the financial statements and notes thereto in our 20142015 Annual Report on Form 10-K. The accompanying unaudited financial statements include all adjustments both normal recurring and others which, in the opinion of our management, are necessary to present fairly our interim financial statements.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Accounting Standards Issued But Not Yet Adopted
In September 2015,June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-16 "Business Combinations2016-13 "Financial Instruments - Credit Losses (Topic 805)326): Simplifying the Accounting for Measurement-Period Adjustments"Measurement of Credit Losses on Financial Instruments" (ASU 2015-16)2016-13). ASU 2015-16 requires an entity to: recognize adjustments2016-13 changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans, and other instruments, entities will be required to provisional amountsuse a new forward-looking "expected loss" model that are identified during the measurement periodgenerally will result in the reporting period in which the adjustment amounts are determined; record, in the same period's financial statements, the effect on earningsearlier recognition of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date; and present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date.allowances for losses. The guidance also requires increased disclosures. The new standard is effective for interim and annual periods beginning after December 15, 2015, with early2019. Early adoption permittedis permitted. The new standard requires varying transition methods for financial statements that have not been issued.the different categories of amendments. We do not expectare evaluating the impact of the new standard to have a significant impact on our financial statements.
In August 2015,February 2016, the FASB issued ASU 2015-15 "Interest-Imputation of Interest (Subtopic 835-30): Presentation and subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements--Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting"2016-02 "Leases (Topic 842)" (ASU 2015-15)2016-02). In ASU 2015-15, the FASB stated that the guidance in ASU 2015-03 did not address the presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements, and entities are permitted to defer and present debt issuance costs related to line-of-credit arrangements as assets.2016-02 establishes a comprehensive new lease accounting model. The new standard is effective for financial statements issued for interimclarifies the definition of a lease, requires a dual approach to lease classification similar to current lease classifications, and annual reporting periods beginning after December 15, 2015, and requires retrospective presentation, concurrent with ASU 2015-03. We do not expect the new standard will have a significant impact on our financial statements.

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NORTHWEST PIPELINE LLC
NOTES TO FINANCIAL STATEMENTS
(Unaudited)


In July 2015, the FASB issued ASU 2015-11 "Simplifying the Measurement of Inventory" (ASU 2015-11). ASU 2015-11 simplifies the guidancecauses lessees to recognize leases on the subsequent measurement of inventory, excluding inventory measured using last in, first out or the retail inventory method. Under the new standard, in scope inventory should be measured at the lower of cost and net realizable value.balance sheet as a lease liability with a corresponding right-of-use asset. The new standard is effective for interim and annual periods beginning after December 15, 2016, with early2018. Early adoption is permitted. The new standard requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements. We are evaluating the impact of the new standard on our financial statements and our timing for adoption.
In April 2015, the FASB issued ASU 2015-03 "Interest - Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs"(ASU 2015-03). ASU 2015-03 simplifies the presentation of debt issuance costs by requiring such costs be presented as a deduction from the corresponding debt liability. The standard is effective for financial statements issued for interim and annual reporting periods beginning after December 15, 2015, and requires retrospective presentation. Adoption of this standard would result in the presentation of $1.4 million and $1.9 million of debt issuance costs as of September 30, 2015 and December 31, 2014, respectively, as a direct reduction from debt in our balance sheet. The standard will have no impact on our statements of comprehensive income and cash flows.
In February 2015, the FASB issued ASU 2015-02 "Amendments to the Consolidation Analysis"(ASU 2015-02). ASU 2015-02 alters the models used to determine consolidation conclusions for certain entities, including limited partnerships, and may require additional disclosures. The standard is effective for financial statements issued for interim and annual reporting periods beginning after December 15, 2015, with either retrospective or modified retrospective presentation allowed. We are evaluating the impact of the new standard on our financial statements.
In May 2014, the FASB issued ASU 2014-09 establishing Accounting Standards Codification (ASC) Topic 606, "Revenue from Contracts with Customers" (ASC 606). ASC 606 establishes a comprehensive new revenue recognition model designed to depict the transfer of goods or services to a customer in an amount that reflects the consideration the entity expects to be entitled to receive in exchange for those goods or services and requires significantly enhanced revenue disclosures. In August 2015, the

NORTHWEST PIPELINE LLC
NOTES TO FINANCIAL STATEMENTS
(Unaudited)


FASB issued ASU 2015-14 "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date" (ASU 2015-14). Per ASU 2015-14, the standard is effective for interim and annual reporting periods beginning after December 15, 2017. ASC 606 allows either full retrospective or modified retrospective transition and early adoption is permitted for annual periods beginning after December 15, 2016. We continue to evaluate both the impact of this new standard on our financial statements and the transition method we will utilize for adoption.

2. CONTINGENT LIABILITIES AND COMMITMENTS
Environmental Matters
We are subject to the National Environmental Policy Act and other federal and state legislation regulating the environmental aspects of our business. Except as discussed below, our management believes that we are in substantial compliance with existing environmental requirements. Environmental expenditures are expensed or capitalized depending on their future economic benefit and potential for rate recovery. We believe that, with respect to any expenditures required to meet applicable standards and regulations, the Federal Energy Regulatory Commission (FERC) would grant the requisite rate relief so that substantially all of such expenditures would be permitted to be recovered through rates. As a result, we believe that compliance with applicable environmental requirements is not likely to have a material adverse effect upon our financial position or results of operations.
Beginning in the mid-1980s, we evaluated many of our facilities for the presence of toxic and hazardous substances to determine to what extent, if any, remediation might be necessary. We identified polychlorinated biphenyl (PCB) contamination in air compressor systems, soils, and related properties at certain compressor station sites. Similarly, we identified hydrocarbon impacts at these facilities due to the former use of earthen pits, lubricating oil leaks or spills, and excess pipe coating released to the environment. In addition, heavy metals have been identified at these sites due to the former use of mercury containing meters and paint and welding rods containing lead, cadmium, and arsenic. The PCBs were remediated pursuant to a Consent Decree with the U.S. Environmental Protection Agency (EPA) in the late 1980s, and we conducted a voluntary clean-up of the hydrocarbon and mercury impacts in the early 1990s. In 2005, the Washington Department of Ecology required us to re-evaluate our previous clean-ups in Washington. During 2006 to 2014, 1432015, 129 meter stations were evaluated, of which 8082 required remediation. As of SeptemberJune 30, 2015,2016, all but oneof the meter station hasstations have been remediated. Initial assessments have been completed at all thirteen compressor stations in Washington. Additional assessments are ongoing at three of these compressor stations. Remediation has been completed at nine of the thirteen compressor stations. On the basis of the findings to date, we estimate that environmental assessment and remediation costs will total approximately $7.0$3.8 million, measured on an undiscounted basis, and are expected to be incurred through 2019. At SeptemberJune 30, 20152016 and December 31, 2014,2015, we had accrued liabilities totaling approximately $7.0

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NORTHWEST PIPELINE LLC
NOTES TO FINANCIAL STATEMENTS
(Unaudited)


$3.8 million and $7.8$4.6 million, respectively, for these costs. We are conducting environmental assessments and implementing a variety of remedial measures that may result in increases or decreases in the total estimated costs.
In March 2008, the EPA promulgated a new, lower National Ambient Air Quality Standard (NAAQS) for ground-level ozone. In May 2012, the EPA completed designation of new eight-hour ozone non-attainment areas. Based on the published designations, no Northwest facilities are located within the non-attainment areas. At this time, it is unknown whether future state regulatory actions associated with implementation of the 2008 ozone standard will impact our operations and increase the cost of additions to property, plant and equipment. Until any additional state regulatory actions are proposed, we are unable to estimate the cost of additions that may be required to meet any such new regulation.
In December 2014, the EPA proposed to further reduce the ground-level ozone NAAQS from the March 2008 levels and subsequently finalized a rule on October 1, 2015. We are monitoring the rule's implementation as the reduction will trigger additional federal and state regulatory actions that may impact our operations. As a result, the cost of additions to property, plant, and equipment is expected to increase. We are unable at this time to estimate with any certainty the cost of additions that may be required to meet new regulations.
On January 22, 2010, the EPA set a new one-hour nitrogen dioxide (NO2) NAAQS. The effective date of the new NO2 standard was April 12, 2010. On January 20, 2012, the EPA determined pursuant to available information that no area in the country is violating the 2010 NO2 NAAQS, and thus, designated all areas of the country as “unclassifiable/attainment.” Also, at that time, the EPA noted its plan to deploy an expanded NO2 monitoring network beginning in 2013. However, on October 5, 2012, the EPA proposed a graduated implementation of the monitoring network between January 1, 2014 and January 1, 2017. Once three years of data isare collected from the new monitoring network, the EPA will reassess attainment status with the one-hour NO2 NAAQS. Until that time, the EPA or states may require ambient air quality modeling on a case by case basis to demonstrate compliance with the NO2 standard. Because we are unable to predict the outcome of the EPA’s or states’ future assessment using the new monitoring network, we are unable to estimate the cost of additions that may be required to meet this regulation.

NORTHWEST PIPELINE LLC
NOTES TO FINANCIAL STATEMENTS
(Unaudited)


Other Matters
Various other proceedings are pending against us and are considered incidental to our operations.
Summary
We estimate that for all matters for which we are able to reasonably estimate a range of loss, including those noted above and others that are not individually significant, our aggregate reasonably possible losses beyond amounts accrued for all of our contingent liabilities are immaterial to our expected future annual results of operations, liquidity, and financial position.  These calculations have been made without consideration of any potential recovery from third-parties.  We have disclosed all significant matters for which we are unable to reasonably estimate a range of possible loss.

3. DEBT AND FINANCING ARRANGEMENT
Credit Facility
On February 2, 2015, the previous credit facility to which we were a party was terminated in connection with the merger of the former Williams Partners L.P. with and into ACMP. Simultaneously, we,We, along with WPZ and Transcontinental Gas Pipe Line Company, LLC, (Transco), as co-borrowers, entered intoare party to a newcredit agreement with aggregate commitments available of $3.5 billion, credit facility.with up to an additional $500 million increase in aggregate commitments available under certain circumstances. Total letter of credit capacity available to WPZ under thethis credit facility is $1.125 billion. We mayare able to borrow up to $500 million under this credit facility to the extent not otherwise utilized by WPZ and Transco.the other co-borrowers. At SeptemberJune 30, 20152016, no letters of credit have been issued and $500 million$1.425 billion of loans to WPZ are outstanding under the credit facility.
WPZ participates in a commercial paper program, and WPZ management considers amounts outstanding under this program to be a reduction of available capacity under the credit facility. The program allows a maximum outstanding amount at any time of $3 billion of unsecured commercial paper notes. At SeptemberJune 30, 20152016, WPZ had $1.53 billion$196 million of outstanding commercial paper.paper outstanding.
Retirement of Long-Term Debt
In June 2016, we retired our $175.0 million 7 percent senior unsecured notes that matured on June 15, 2016. These notes were retired with proceeds from the repayment of advances to WPZ.
Long-Term Debt Due Within One Year
The long-term debt due within one year at SeptemberJune 30, 20152016 is associated with the $175$185 million 7%5.95 percent senior unsecured notes that mature on JuneApril 15, 2016.

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NORTHWEST PIPELINE LLC
NOTES TO FINANCIAL STATEMENTS
(Unaudited)



4. FINANCIAL INSTRUMENTS
Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:
Cash and advances to affiliate—The carrying amounts approximate fair value because of the short-term nature of these instruments.
Long-term debt—The disclosed fair value of our long-term debt, which we consider as a level 2 measurement, is determined by a market approach using broker quoted indicative period-end bond prices. The quoted prices are based on observable transactions in less active markets for our debt or similar instruments. The carrying amount and estimated fair value of our long-term debt, including current maturities, were $694.6$518.9 million and $738.1$547.7 million, respectively, at SeptemberJune 30, 20152016, and $694.4$693.4 million and $766.5$721.9 million, respectively, at December 31, 20142015.

5. TRANSACTIONS WITH AFFILIATES
We are a participant in WPZ’s cash management program. At SeptemberJune 30, 20152016 and December 31, 20142015, the advances due to us by WPZ totaled approximately $187.436.5 million and $135.1171.9 million, respectively. These advances are represented by demand notes and are classified as Current Assets in the accompanying Balance Sheet. 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

NORTHWEST PIPELINE LLC
NOTES TO FINANCIAL STATEMENTS
(Unaudited)


0.25 percent at SeptemberJune 30, 20152016. The interest income from these advances was minimal during the three and ninesix months ended SeptemberJune 30, 20152016 and SeptemberJune 30, 20142015. Such interest income is included in Other (Income) and Other Expenses – Miscellaneous other (income) expenses, net on the accompanying Statement of Comprehensive Income.
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 were billed $24.1$21.1 million and $74.5$46.1 million in the three and ninesix months ended SeptemberJune 30, 20152016, respectively, and $24.4$25.0 million and $74.8$50.4 million in the three and ninesix months ended SeptemberJune 30, 2014,2015, respectively, for these services. Such expenses are primarily included in General and administrative and Operation and maintenance expenses on the accompanying Statement of Comprehensive Income. The amount billed to us for the six months ended June 30, 2016 includes $2.0 million for severance and other related costs associated with a reduction in workforce.
During the ninesix months ended SeptemberJune 30, 20152016 and 2014,2015, we declared and paid cash distributions to our parent of $129.086.0 million and $191.0$88.0 million, respectively. During October 2015,July 2016, we declared and paid cash distributions of $39.0$45.0 million to our parent.
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.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

GENERAL
The following discussion should be read in conjunction with the Management’s Discussion and Analysis, Financial Statements, and Notes contained in Items 7 and 8 of our 20142015 Annual Report on Form 10-K and with the Financial Statements and Notes contained in this Form 10-Q.

RESULTS OF OPERATIONS
Analysis of Financial Results
This analysis discusses financial results of our operations for the ninesix-month periods ended SeptemberJune 30, 20152016 and 20142015. Variances due to changes in natural gas prices and transportation volumes have little impact on revenues, because under our rate design methodology, the majority of overall cost of service is recovered through firm capacity reservation charges in our transportation rates.
Our operating revenues increased $2.2$0.8 million or 1 percent, in the first ninesix months of 20152016 as compared with the first ninesix months of 2014.2015. This increase is primarily associated with higher commodity transportation revenues,an extra day of business in 2016, due to an increase in off-system deliveries in 2015.leap year. Transportation service accounted for 97 percent and 98 percent, respectively, and gas storage service accounted for 983 percent and 2 percent, respectively, of our operating revenues for the periods ended SeptemberJune 30, 20152016 and SeptemberJune 30, 20142015.
Operating expenses decreased $0.6increased $1.7 million, or 1 percent, due primarily to an increase in pipeline maintenance of $4.1 million and $2.0 million in severance and other related costs, recorded in the first nine months of 2015 as comparedquarter, associated with the first nine months of 2014. Decreasesa reduction in contractual and other services and supplies of $1.6 million, resulting primarily from decreased pipeline maintenance and repairs, and charges from affiliates of $2.7 million wereworkforce, partially offset by increases in labor related expensesdecreased charges for corporate administrative services of $2.2 million and depreciation of $1.2 million, resulting primarily from property additions.$4.2 million.
Capital Expenditures
Our capital expenditures were $50.622.8 million and $51.034.4 million for the ninesix months ended SeptemberJune 30, 20152016 and 20142015, respectively. Our capital expenditures estimate for 20152016 is discussed in our 20142015 Annual Report on Form 10-K.


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Item 4. Controls and Procedures
Our management, including our Senior Vice President—West and our Vice President and Chief Accounting Officer, does not expect that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act) (Disclosure Controls) or our internal control over financial reporting (Internal Controls) will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. We monitor our Disclosure Controls and Internal Controls and make modifications as necessary; our intent in this regard is that the Disclosure Controls and Internal Controls will be modified as systems change and conditions warrant.
Evaluation of Disclosure Controls and Procedures
An evaluation of the effectiveness of the design and operation of our Disclosure Controls was performed as of the end of the period covered by this report. This evaluation was performed under the supervision and with the participation of our management, including our Senior Vice President—West and our Vice President and Chief Accounting Officer. Based upon that evaluation, our Senior Vice President—West and our Vice President and Chief Accounting Officer concluded that these Disclosure Controls are effective at a reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There have been no changes during the thirdsecond quarter of 20152016 that have materially affected, or are reasonably likely to materially affect, our Internal Control over Financial Reporting.


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PART II. OTHER INFORMATION

Item 1. Legal Proceedings
The information called for by this item is provided in Note 2. Contingent Liabilities and Commitments, included in the Notes to Financial Statements included under Part 1, Item 1. Financial Statements of this Form 10-Q, which information is incorporated by reference into this item.

Item 1A. Risk Factors

Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2015 includes certain risk factors that could materially affect our business, financial condition, or future results. The risk factor “The pendency of the proposed ETC Merger between Energy Transfer and Williams could adversely affect our business and operations.” isno longer applicable.

Our remaining risk factors are supplemented as set forth below:

Following ETE’s termination of and failure to close the ETC Merger, perceived uncertainties concerning Williams’ strategic direction may have an adverse effect on our business.
As a subsidiary of Williams, we may suffer from the lingering effects of ETE’s termination of and failure to close the ETC Merger including, among other circumstances, perceived uncertainties as to Williams’ future strategic direction. Such uncertainties may harm our ability to attract investors in order to raise capital, impact our existing and potential relationships with customers and strategic partners, result in the loss of business opportunities and make it more difficult for Williams to attract and retain qualified personnel who provide services to us.




Item 6. Exhibits
The following instruments are included as exhibits to this report.
 
Exhibit Description
   
2 Certificate of Conversion of Northwest Pipeline GP (Exhibit 2.1 to our report on Form 8-K, filed July 3, 2013 (File No. 001-07414)) and incorporated herein by reference.
   
3.1 Certificate of Formation of Northwest Pipeline LLC (Exhibit 2.2 to our report on Form 8-K, filed July 3, 2013 (File No. 001-07414)) and incorporated herein by reference.
   
3.2 Operating Agreement of Northwest Pipeline LLC (Exhibit 3.1 to our report on Form 8-K, filed July 3, 2013 (File No. 001-07414)) and incorporated herein by reference.
   
31.1* Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
   
31.2* Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
   
32** Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
101.INS* XBRL Instance Document.
   
101.SCH* XBRL Taxonomy Extension Schema.
   
101.CAL* XBRL Taxonomy Extension Calculation Linkbase.
   
101.DEF* XBRL Taxonomy Definition Linkbase.
   
101.LAB* XBRL Taxonomy Extension Label Linkbase.
   
101.PRE* XBRL Taxonomy Extension Presentation Linkbase.
*Filed herewith.
**Furnished herewith.



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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
    
   NORTHWEST PIPELINE LLC
   Registrant
    
 By: /s/ Jeffrey P. Heinrichs
   
Jeffrey P. Heinrichs
Controller
(Duly Authorized Officer and
Principal Accounting Officer)
Date: October 29, 2015August 2, 2016


Table of Contents

EXHIBIT INDEX
Exhibit Description
   
2 Certificate of Conversion of Northwest Pipeline GP (Exhibit 2.1 to our report on Form 8-K, filed July 3, 2013 (File No. 001-07414)) and incorporated herein by reference.
   
3.1 Certificate of Formation of Northwest Pipeline LLC (Exhibit 2.2 to our report on Form 8-K, filed July 3, 2013 (File No. 001-07414)) and incorporated herein by reference.
   
3.2 Operating Agreement of Northwest Pipeline LLC (Exhibit 3.1 to our report on Form 8-K, filed July 3, 2013 (File No. 001-07414)) and incorporated herein by reference.
   
31.1* Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
   
31.2* Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
   
32** Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
101.INS* XBRL Instance Document.
   
101.SCH* XBRL Taxonomy Extension Schema.
   
101.CAL* XBRL Taxonomy Extension Calculation Linkbase.
   
101.DEF* XBRL Taxonomy Definition Linkbase.
   
101.LAB* XBRL Taxonomy Extension Label Linkbase.
   
101.PRE* XBRL Taxonomy Extension Presentation Linkbase.
*Filed herewith.
**Furnished herewith.