UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2016~~2017



¨	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~~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, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” ~~and~~ “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~



Large accelerated filer¨	Accelerated filer ¨	~~Accelerated~~ Non-accelerated filerþ	Smaller reporting company ¨	Emerging growth company ¨

~~Non-accelerated filer~~	þ ~~(Do~~(Do not check if a smaller reporting company)	~~Smaller reporting company~~	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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.

Table of Contents

NORTHWEST PIPELINE LLC

FORM 10-Q

INDEX



	Page
PART I. FINANCIAL INFORMATION:

Item 1. Financial Statements -

Statement of Comprehensive Income — Three Months Ended March 31, ~~2016~~2017 and ~~2015~~2016	1

Balance Sheet — March 31, ~~2016~~2017 and December 31, ~~2015~~ 2016	2

Statement of Cash Flows — Three Months Ended March 31, ~~2016~~2017 and ~~2015~~2016	4

Notes to Financial Statements	5

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	810

Item 4. Controls and Procedures	911

PART II. OTHER INFORMATION:

Item 1. Legal Proceedings	1012

Item 6. Exhibits	1012

Forward-Looking Statements

The 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 (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:

~~The status, expected timing~~

Our and ~~expected outcome of the proposed ETC Merger;~~

~~Events which may occur subsequent to the proposed ETC Merger including events which directly impact~~ our ~~business;~~affiliates' future credit ratings;

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.

Table of Contents

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 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:

~~The timing and likelihood of completion of the proposed ETC Merger, including the satisfaction of conditions to the completion of the proposed ETC Merger;~~

~~Energy Transfer's plans for us, following the completion of the prosed ETC Merger;~~

~~Disruption from the proposed ETC Merger making it more difficult to maintain business and operational relationships;~~

Availability of supplies, including lower than anticipated volumes from third parties, 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 capital expenditure budget;

Whether Williams will be able to effectively manage the transition in its board of directors and management as well as successfully execute its business restructuring;

Our ability to successfully expand our facilities and operations;

Development of alternative energy sources;

The impact of operational and development hazards and unforeseen interruptions and the availability of adequate insurance coverage for such interruptions;

~~Costs~~The impact of ~~changes in, or~~existing 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 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, ~~2015~~2016.

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

NORTHWEST PIPELINE LLC

STATEMENT OF COMPREHENSIVE INCOME

(Thousands of Dollars)

(Unaudited)


	Three months ended March 31,						Three months ended March 31,
	2016			2015			2017			2016
OPERATING REVENUES	$	120,448		$	119,264		$	120,500		$	120,448
OPERATING EXPENSES:
General and administrative	13,827			14,923			14,081			13,827
Operation and maintenance	17,252			17,149			15,452			17,252
Depreciation	25,315			25,081			25,461			25,315
Regulatory debits	849			598			1,247			849
Taxes, other than income taxes	4,352			4,361			4,781			4,352
Total operating expenses	61,595			62,112			61,022			61,595
OPERATING INCOME	58,853			57,152			59,478			58,853
OTHER (INCOME) AND OTHER EXPENSES:
Interest expense	11,477			11,508			8,362			11,477
Allowance for equity and borrowed funds used during construction	(383		)	(139		)	(150		)	(383		)
Miscellaneous other (income) expenses, net	638			(625		)	117			638
Total other (income) and other expenses	11,732			10,744			8,329			11,732
NET INCOME	47,121			46,408			51,149			47,121
CASH FLOW HEDGES:
Amortization of cash flow hedges into Interest expense	(15		)	(15		)	—			(15		)
COMPREHENSIVE INCOME	$	47,106		$	46,393		$	51,149		$	47,106

See accompanying notes.

NORTHWEST PIPELINE LLC

BALANCE SHEET

(Thousands of Dollars)

(Unaudited)


	March 31, 2016		December 31, 2015		March 31, 2017		December 31, 2016
ASSETS
CURRENT ASSETS:
Cash	$	128	$	169	$	—	$	—
Receivables:
Trade	41,317		42,669		41,457		42,702
Affiliated companies	1,702		1,441		1,536		1,321
Advances to affiliate	198,021		171,867		69,184		45,137
Other	9,441		14,051		1,693		598
Materials and supplies	10,209		10,183		10,137		10,106
Exchange gas due from others	1,481		3,733		2,295		3,869
Exchange gas offset	—		201
Prepayments and other	4,669		6,164		6,017		5,740
Total current assets	266,968		250,478		132,319		109,473
PROPERTY, PLANT AND EQUIPMENT, at cost	3,315,570		3,306,205		3,327,908		3,319,516
Less-Accumulated depreciation	1,392,203		1,367,632		1,444,392		1,424,855
Total property, plant and equipment, net	1,923,367		1,938,573		1,883,516		1,894,661
OTHER ASSETS:
Deferred charges	1,947		2,110		1,235		2,122
Regulatory assets	39,047		40,853		32,290		34,900
Total other assets	40,994		42,963		33,525		37,022
Total assets	$	2,231,329	$	2,232,014	$	2,049,360	$	2,041,156

See accompanying notes.

NORTHWEST PIPELINE LLC

BALANCE SHEET

(Thousands of Dollars)

(Unaudited)


	March 31, 2016		December 31, 2015		March 31, 2017		December 31, 2016
LIABILITIES AND OWNER’S EQUITY
CURRENT LIABILITIES:
Payables:
Trade	$	11,164	$	14,363	$	11,169	$	11,243
Affiliated companies	10,651		11,959		4,927		7,293
Accrued liabilities:
Taxes, other than income taxes	14,458		11,033		14,731		11,435
Interest	15,155		4,045		11,548		3,501
Exchange gas due to others	938		2,252		1,833		4,169
Exchange gas offset	635		—		1,501		1,428
Customer advances	3,529		5,573		1,369		1,893
Other	3,071		3,417		5,110		5,224
Long-term debt due within one year	174,926		174,837		—		184,924
Total current liabilities	234,527		227,479		52,188		231,110
LONG-TERM DEBT	518,727		518,583		519,304		334,236
OTHER NONCURRENT LIABILITIES:
Asset retirement obligations	83,730		82,454		59,478		60,762
Regulatory liabilities	27,737		26,802		32,632		30,717
Other	5,914		6,108		7,594		7,316
Total other noncurrent liabilities	117,381		115,364		99,704		98,795
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	286,789		296,668		304,272		303,123
Accumulated other comprehensive income	13		28
Total owner’s equity	1,360,694		1,370,588		1,378,164		1,377,015
Total liabilities and owner’s equity	$	2,231,329	$	2,232,014	$	2,049,360	$	2,041,156

See accompanying notes.

NORTHWEST PIPELINE LLC

STATEMENT OF CASH FLOWS

(Thousands of Dollars)

(Unaudited)


	Three months ended March 31,						Three months ended March 31,
	2016			2015			2017			2016
OPERATING ACTIVITIES:
Net income	$	47,121		$	46,408		$	51,149		$	47,121
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	25,315			25,081			25,461			25,315
Regulatory debits	849			598			1,247			849
Amortization of deferred charges and credits	(165		)	336			173			(165		)
Allowance for equity funds used during construction	(262		)	(95		)	(110		)	(262		)
Changes in current assets and liabilities:
Trade and other accounts receivable	1,061			1,975			150			1,061
Affiliated receivables	(261		)	662			(215		)	(261		)
Exchange gas due from others	771			1,786			1,574			771
Materials and supplies	(26		)	(60		)	(31		)	(26		)
Other current assets	1,495			(201		)	(277		)	1,495
Trade accounts payable	(2,062		)	(1,693		)	(2,949		)	(2,062		)
Affiliated payables	(1,308		)	(2,937		)	(2,366		)	(1,308		)
Exchange gas due to others	(771		)	(1,772		)	(1,573		)	(771		)
Other accrued liabilities	12,285			14,269			11,196			12,285
Changes in noncurrent assets and liabilities:
Deferred charges	(1,341		)	(495		)	820			(1,341		)
Noncurrent liabilities	2,650			2,883			2,554			2,650
Net cash provided by operating activities	85,351			86,745			86,803			85,351
FINANCING ACTIVITIES:
Cash distributions to parent	(57,000		)	(58,000		)	(50,000		)	(57,000		)
Other	—			(1,097		)
Net cash used in financing activities	(57,000		)	(59,097		)	(50,000		)	(57,000		)
INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures, net of equity AFUDC*	(12,327		)	(10,360		)	(12,389		)	(12,327		)
Contributions and advances for construction costs	379			751			(417		)	379
Disposal of property, plant and equipment, net	(66		)	(548		)	50			(66		)
Advances to affiliates, net	(26,154		)	(17,066		)	(24,047		)	(26,154		)
Proceeds from insurance	9,776			—			—			9,776
Net cash used in investing activities	(28,392		)	(27,223		)
Net cash provided by (used in) investing activities							(36,803		)	(28,392		)
NET INCREASE (DECREASE) IN CASH	(41		)	425			—			(41		)
CASH AT BEGINNING OF PERIOD	169			154			—			169
CASH AT END OF PERIOD	$	128		$	579		$	—		$	128
____________________________________
* Increases to property, plant and equipment	$	(5,759	)	$	(11,045	)	$	(14,768	)	$	(5,759	)
Changes in related accounts receivable, accounts payable, and accrued liabilities	(6,568		)	685			2,379			(6,568		)
Capital expenditures, net of equity AFUDC	$	(12,327	)	$	(10,360	)	$	(12,389	)	$	(12,327	)

See accompanying notes.

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~~In January 2017, Williams permanently waived the WPZ general partner's incentive distribution rights, converted its 2 ~~2015,~~percent general partner interest in WPZ ~~was merged into Access Midstream Partners, L.P. (ACMP), another publicly traded limited partnership consolidated by Williams. ACMP was the surviving partnership~~to a non-economic interest, and ~~was subsequently renamed WPZ.~~purchased additional WPZ common units. At March 31, ~~2016~~2017, Williams ~~holds~~owned an approximate ~~60 percent interest in WPZ, comprised of an approximate 58~~74 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 provides that, subject to the satisfaction of customary closing conditions, Williams will 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 will be treated as a corporation for U.S. federal income tax purposes. Immediately following the completion of the ETC Merger, ETC will 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 the ETC Merger.WPZ.

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 ~~2015~~2016 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 ~~February~~August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-15 "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" (ASU 2016-15). ASU 2016-15 provides specific guidance on eight cash flow classification issues, including debt prepayment or debt extinguishment costs and distributions received from equity method investees, to reduce diversity in practice. ASU 2016-15 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. ASU 2016-15 requires a retrospective transition. We are evaluating the impact of ASU 2016-15 on our financial statements.

In June 2016, the FASB issued ASU 2016-13 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (ASU 2016-13). ASU 2016-13 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 use a new forward-looking "expected loss" model that generally will result in the earlier recognition of allowances for losses. The guidance also requires increased disclosures. ASU 2016-13 is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted. ASU 2016-13 requires varying transition methods for the different categories of amendments. We do not expect ASU 2016-13 to have a significant impact on our financial statements.

In February 2016, the FASB issued ASU 2016-02 "Leases (Topic 842)" (ASU 2016-02). ASU 2016-02 establishes a comprehensive new lease accounting model. The ~~new standard~~ASU 2016-02 clarifies the definition of a lease, requires a dual approach to lease classification similar to current lease classifications, and causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset. ~~The new standard~~ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. ~~The new standard~~ASU 2016-02 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~~reviewing contracts to identify leases, particularly reviewing the ~~impact~~applicability of ~~the~~this new ~~standards on our financial statements.~~standard to contracts involving easement/rights-of-way.

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 April 2016, the FASB issued ASU 2016-10 "Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing" (ASU 2016-10) to clarify aspects of Topic 606 related to identifying performance obligations and licensing implementation guidance. In August 2015, the 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.~~

NORTHWEST PIPELINE LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

We continue to evaluate the impact the standard may have on our financial statements. For each revenue contract type, we are conducting a formal contract review process to evaluate the impact, if any, that the new revenue standard may have. We have substantially completed that process, but continue to evaluate our accounting for noncash consideration, which exists in contracts where we receive commodities as full or partial consideration. As such, we are unable to determine the potential impact upon the amount and timing of revenue recognition and related disclosures. Additionally, we have identified possible financial system and internal control changes necessary for adoption. We currently anticipate utilizing a modified retrospective transition upon the adoption of ASC 606 as of January 1, 2018.

2. RATE AND REGULATORY MATTERS

Rate Case Settlement Filing

On January 23, 2017, we filed for Federal Energy Regulatory Commission (FERC) approval a Stipulation and Settlement Agreement (Settlement) and were assigned Docket No. RP17-346. The Settlement specified an annual cost of service of $440 million and established a new general system firm Rate Schedule TF-1 (Large Customer) demand rate of $0.39294/Dth with a $0.00832 commodity rate (Phase 1) and a demand rate of $0.39033/Dth with a $0.00832 commodity rate (Phase 2). Phase 1 rates become effective January 1, 2018, with Phase 2 rates becoming effective October 1, 2018. The annual cost of service does not change from Phase 1 to Phase 2, but the Phase 2 rates reflect the termination of fifteen-year levelized contracts that will now become Rate Schedule TF-1 (Large Customer) contracts. Provisions were included in the Settlement that we can file a general rate case to place new rates into effect after October 1, 2018, and that a general rate case must be filed for new rates to become effective no later than January 1, 2023.

Due to the resignation of one of the commissioners, the FERC has been left without a quorum since February 4, 2017. This lack of quorum has left FERC unable to formally approve the Settlement. In response, on March 29, 2017, we filed tariff records with the FERC to extend our requirement to file an NGA section 4 general rate case "by not later than July 1, 2017" (as required in our prior Settlement in Docket No. RP12-490 and our pending 2017 Settlement in RP 17-346). These tariff records also provide a means to place the rate reductions of the 2017 Settlement into effect commencing January 1, 2018 until a quorum at FERC is restored and can formally approve the Settlement. This new filing was assigned Docket No. RP17-567. On April 12, 2017, the FERC issued an order accepting the tariff records effective May 1, 2017.

3. 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.

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 2015, 129 meter stations were evaluated, of which 82 required remediation. As of March 31, ~~2016,~~2017, all of the meter stations have been remediated. Initial assessments have been completed at all thirteen compressor stations in Washington. Additional assessments are ongoing at ~~three~~two of these compressor stations. Remediation has been completed at ~~nine~~eleven of the thirteen compressor stations. On the basis of the findings to date, we estimate that environmental assessment and remediation costs will total approximately ~~$4.1~~$4.4 million, measured on an undiscounted basis, and are expected to be incurred through ~~2019.~~

NORTHWEST PIPELINE LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

2020. At March 31, ~~2016~~2017 and December 31, ~~2015,~~2016, we had accrued liabilities totaling approximately ~~$4.1~~$4.4 million and ~~$4.6~~$4.4 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.

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

~~NORTHWEST PIPELINE LLC~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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.~~third parties. We have disclosed all significant matters for which we are unable to reasonably estimate a range of possible loss.

3.4. DEBT AND FINANCING ARRANGEMENT

Credit Facility

We, along with WPZ and Transcontinental Gas Pipe Line Company, LLC, ~~(Transco),~~ are a party to a credit agreement with aggregate commitments available of $3.5 billion, with up to an additional $500 million increase in aggregate commitments available under certain circumstances. Total letter of credit capacity available to WPZ under this credit facility is $1.125 billion. We are 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 March 31, ~~2016~~2017, no letters of credit have been issued and ~~$625 million of~~no loans ~~to WPZ are~~were 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 March 31, ~~2016~~2017, ~~WPZ had $135~~no commercial paper was outstanding under the commercial paper program.

Issuance and Retirement of Long-Term Debt

On April 3, 2017, we issued $250 million of ~~commercial paper outstanding.~~

~~Long-Term Debt Due Within One Year~~

~~The long-term debt due within one year at March 31, 2016 is associated with the $175 million 7%~~4.00 percent senior unsecured notes due 2027 to investors in a private debt placement. We used the net proceeds to repay the $185 million, 5.95 percent notes that ~~mature~~matured on ~~June~~April 15, ~~2016.~~2017, and to fund

NORTHWEST PIPELINE LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

capital expenditures. Accordingly, the $185 million, 5.95 percent notes are classified as non-current in the accompanying Balance Sheet. As part of the the issuance, we entered into a registration rights agreement with the initial purchaser of the unsecured notes. We are obligated to file and consummate a registration statement for an offer to exchange the notes for a new issue of substantially identical notes registered under the Securities Act of 1933, as amended, within 365 days from the closing and to use commercially reasonable efforts to complete the exchange offer. We are required to provide a shelf registration statement to cover resales of the notes under certain circumstances. If we fail to fulfill these obligations, additional interest will be accrued on the affected securities. The rate of additional interest will be 0.25 percent per annum on the principal amount of the affected securities for the first 90-day period immediately following the occurrence of a registration default, increasing by an additional 0.25 percent per annum with respect to each subsequent 90-day period thereafter, up to a maximum amount for all such registration defaults of 0.5 percent annually. Following the cure of any registration defaults, the accrual of additional interest will cease.

4.5. 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 ~~$693.7~~$519.3 million and ~~$692.3~~$548.5 million, respectively, at March 31, ~~2016~~2017, and ~~$693.4~~$519.2 million and ~~$721.9~~$546.8 million, respectively, at December 31, ~~2015~~2016.

5.6. TRANSACTIONS WITH AFFILIATES

We are a participant in WPZ’s cash management program. At March 31, ~~2016~~2017 and December 31, ~~2015~~2016, the advances due to us by WPZ totaled approximately $~~198.0~~69.2 million and $~~171.9~~45.1 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 ~~0.22~~0.57 percent at March 31, ~~2016~~2017. The interest income from these advances was minimal during the three months ended March 31, ~~2016~~2017 and March 31, ~~2015~~2016. 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 ~~$25.0~~$23.0 million and ~~$25.4~~$25.0 million in the three months

~~NORTHWEST PIPELINE LLC~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~(Unaudited)~~

ended March 31, ~~2016~~2017, and ~~2015,~~2016, 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 three months ended March 31, 2016, includes $2.0 million recognized in the first quarter of 2016 for severance and other related costs associated with a reduction in workforce.

During the three months ended March 31, ~~2016~~2017 and ~~2015,~~2016, we declared and paid cash distributions to our parent of $~~57.0~~50.0 million and ~~$58.0~~$57.0 million, respectively. During April ~~2016,~~2017, we declared and paid an additional cash ~~distributions~~distribution of ~~$29.0~~$57.0 million to our parent.

NORTHWEST PIPELINE LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

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.

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 ~~2015~~2016 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 three-month periods ended March 31, ~~2016~~2017 and ~~2015~~2016. 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 $1.2 million, or 1 percent,~~were relatively flat in the first three months of ~~2016~~2017 as compared with the first three months of ~~2015. This increase is primarily associated with an extra day of business in 2016, due to leap year.~~2016. Transportation ~~service~~services 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 March 31, ~~2016~~2017 and March 31, ~~2015~~2016.

Operating expenses decreased ~~$0.5~~$0.6 million, or 1 percent for the first three months of 2017 as compared to the first three months of 2016, due primarily to ~~decreases in charges from affiliates of $2.1 million, partially offset by~~the $2.0 million in severance and other related costs, recorded in the first quarter 2016, associated with a reduction in ~~workforce.~~workforce; this was partially offset by higher depreciation of $0.1 million, resulting from property additions; increased property and use taxes of $0.4 million; higher insurance of $0.2; lower labor capitalized of $0.2 and higher regulatory debit expense of $0.4 in the first quarter of 2017.

Interest expense decreased $3.1 million, or 27 percent, as a result of the retirement of our $175.0 million 7 percent senior unsecured notes that matured on June 15, 2016.

Financing

On April 3, 2017, we issued $250 million of 4.00 percent senior unsecured notes due 2027 to investors in a private debt placement. We used the net proceeds to repay the $185 million, 5.95 percent notes that matured on April 15, 2017, and to fund capital expenditures.

Capital Expenditures

Our capital expenditures were $~~12.3~~12.4 million and $~~10.4~~12.3 million for the three months ended March 31, ~~2016~~2017 and ~~2015~~2016, respectively. Our capital expenditures estimate for ~~2016~~2017 is discussed in our ~~2015~~2016 Annual Report on Form 10-K.

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 first quarter of ~~2016~~2017 that have materially affected, or are reasonably likely to materially affect, our Internal Control over Financial Reporting.

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 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.

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: May ~~5, 2016~~4, 2017

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.