Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Jul. 30, 2015 | |
Entity Information [Line Items] | ||
Entity registrant name | Northwest Pipeline LLC | |
Entity central index key | 110,019 | |
Document type | 10-Q | |
Document period end date | Jun. 30, 2015 | |
Amendment flag | false | |
Document fiscal year focus | 2,015 | |
Document fiscal period focus | Q2 | |
Current fiscal year end date | --12-31 | |
Entity filer category | Non-accelerated Filer | |
Entity common stock, shares outstanding | 0 |
Statement of Comprehensive Inco
Statement of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
OPERATING REVENUES | $ 115,946 | $ 114,644 | $ 235,210 | $ 233,729 |
OPERATING EXPENSES: | ||||
General and administrative | 14,276 | 15,842 | 29,199 | 31,444 |
Operation and maintenance | 18,168 | 20,525 | 35,317 | 37,051 |
Depreciation | 25,078 | 24,784 | 50,159 | 49,398 |
Regulatory debits | 586 | 381 | 1,184 | 762 |
Taxes, other than income taxes | 4,551 | 4,209 | 8,912 | 9,146 |
Total operating expenses | 62,659 | 65,741 | 124,771 | 127,801 |
OPERATING INCOME | 53,287 | 48,903 | 110,439 | 105,928 |
OTHER (INCOME) AND OTHER EXPENSES: | ||||
Interest expense | 11,511 | 11,530 | 23,019 | 23,060 |
Allowance for equity and borrowed funds used during construction | (332) | (173) | (471) | (248) |
Miscellaneous other (income) expenses, net | (1) | (110) | (626) | (23) |
Total other (income) and other expenses | 11,178 | 11,247 | 21,922 | 22,789 |
NET INCOME | 42,109 | 37,656 | 88,517 | 83,139 |
CASH FLOW HEDGES: | ||||
Amortization of cash flow hedges into Interest expense | (16) | (16) | (31) | (31) |
COMPREHENSIVE INCOME | $ 42,093 | $ 37,640 | $ 88,486 | $ 83,108 |
Balance Sheet (Unaudited)
Balance Sheet (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
CURRENT ASSETS: | ||
Cash | $ 189 | $ 154 |
Receivables: | ||
Trade | 38,809 | 42,759 |
Affiliated companies | 1,510 | 2,039 |
Advances to affiliate | 161,147 | 135,054 |
Other | 1,345 | 1,249 |
Materials and supplies | 10,141 | 10,066 |
Exchange gas due from others | 2,584 | 4,184 |
Prepayments and other | 7,633 | 4,881 |
Total current assets | 223,358 | 200,386 |
PROPERTY, PLANT AND EQUIPMENT, at cost | 3,292,073 | 3,269,617 |
Less-Accumulated depreciation | 1,332,545 | 1,288,530 |
Total property, plant and equipment, net | 1,959,528 | 1,981,087 |
OTHER ASSETS: | ||
Deferred charges | 3,940 | 4,700 |
Regulatory assets | 46,298 | 49,923 |
Total other assets | 50,238 | 54,623 |
Total assets | 2,233,124 | 2,236,096 |
Payables: | ||
Trade | 12,840 | 12,709 |
Affiliated companies | 8,595 | 13,143 |
Accrued liabilities: | ||
Taxes, other than income taxes | 12,420 | 11,246 |
Interest | 4,045 | 4,045 |
Exchange gas due to others | 2,343 | 6,406 |
Exchange gas offset | 869 | 3,941 |
Customer advances | 2,803 | 2,363 |
Other | 2,203 | 1,799 |
Long-term debt due within one year | 174,947 | 0 |
Total current liabilities | 221,065 | 55,652 |
LONG-TERM DEBT | 519,572 | 694,420 |
OTHER NONCURRENT LIABILITIES: | ||
Asset retirement obligations | 98,051 | 94,678 |
Regulatory liabilities | 25,088 | 23,375 |
Other | 8,908 | 8,017 |
Total other noncurrent liabilities | $ 132,047 | $ 126,070 |
CONTINGENT LIABILITIES AND COMMITMENTS (Note 2) | ||
OWNER'S EQUITY: | ||
Owner's capital | $ 1,073,892 | $ 1,073,892 |
Retained earnings | 286,489 | 285,972 |
Accumulated other comprehensive income | 59 | 90 |
Total owner's equity | 1,360,440 | 1,359,954 |
Total liabilities and owner's equity | $ 2,233,124 | $ 2,236,096 |
Statement of Cash Flows (Unaudi
Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
OPERATING ACTIVITIES: | ||
Net income | $ 88,517 | $ 83,139 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 50,159 | 49,398 |
Regulatory debits | 1,184 | 762 |
Gain on sale of property, plant and equipment | 0 | (70) |
Amortization of deferred charges and credits | 685 | 704 |
Allowance for equity funds used during construction | (320) | (169) |
Changes in current assets and liabilities: | ||
Trade and other accounts receivable | 3,854 | 2,775 |
Affiliated receivables | 529 | 37,737 |
Exchange gas due from others | 1,600 | (1,043) |
Materials and supplies | (75) | 16 |
Other current assets | (2,752) | (218) |
Trade accounts payable | 2,580 | (4,062) |
Affiliated payables | (4,548) | (622) |
Exchange gas due to others | (1,586) | 1,424 |
Other accrued liabilities | 1,850 | (1,566) |
Changes in noncurrent assets and liabilities: | ||
Deferred charges | (2,076) | (1,885) |
Noncurrent liabilities | 6,134 | 4,847 |
Net cash provided by operating activities | 145,735 | 171,167 |
FINANCING ACTIVITIES: | ||
Cash distributions to parent | (88,000) | (104,000) |
Other | (162) | (656) |
Net cash used in financing activities | (88,162) | (104,656) |
Property, plant and equipment: | ||
Capital expenditures, net of equity AFUDC | (34,353) | (20,582) |
Contributions and advances for construction costs | 1,137 | 826 |
Disposal of property, plant and equipment, net | 1,771 | 2,364 |
Advances to affiliates, net | (26,093) | (49,089) |
Net cash used in investing activities | (57,538) | (66,481) |
NET INCREASE IN CASH | 35 | 30 |
CASH AT BEGINNING OF PERIOD | 154 | 133 |
CASH AT END OF PERIOD | 189 | 163 |
Increases to property, plant and equipment | (31,552) | (20,848) |
Changes in related accounts payable and accrued liabilities | (2,801) | 266 |
Capital expenditures, net of equity AFUDC | $ (34,353) | $ (20,582) |
Basis of Presentation (Notes)
Basis of Presentation (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 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. At June 30, 2015 , Williams holds an approximate 60 percent interest in WPZ, comprised of an approximate 58 percent limited partner interest and all of WPZ’s 2 percent general partner interest. 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 2014 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. A reclassification within the investing activities of the Statement of Cash Flows, between Capital expenditures, net of equity AFUDC* and Contributions and advances for construction costs of $0.8 million for the six months ended June 30, 2014 , has been made to correct the 2014 financial statements to conform to the 2015 presentation. Accounting Standards Issued But Not Yet Adopted In July 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-11 "Simplifying the Measurement of Inventory" (ASU 2015-11). ASU 2015-11 simplifies the guidance 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. The new standard is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. We are evaluating the impact of the new standard. 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 guidance is effective for financial statements issued for reporting periods beginning after December 15, 2015, and interim periods within the reporting periods and requires retrospective presentation. We are evaluating the impact of the new standard. 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 ASU is effective for financial statements issued for reporting periods beginning after December 15, 2015, and interim periods within the reporting periods with either retrospective or modified retrospective presentation allowed. We are currently evaluating the impact of the new standard on our financial statements. In May 2014, the FASB issued ASU 2014-09 establishing Accounting Standards Codification 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. The standard is effective for annual reporting periods beginning after December 15, 2017, and interim periods within the reporting period. 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. |
Contingent Liabilities and Comm
Contingent Liabilities and Commitments (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingent Liabilities and Commitments | 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, 143 meter stations were evaluated, of which 80 required remediation. As of June 30, 2015 , all but one meter station has 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 $7.9 million, measured on an undiscounted basis, and are expected to be incurred through 2019. At June 30, 2015 and December 31, 2014 , we had accrued liabilities totaling approximately $7.9 million and $7.8 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. The EPA is anticipated to finalize any revisions in late 2015. Revisions to the ozone NAAQS will result in 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 (NO 2 ) NAAQS. The effective date of the new NO 2 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 NO 2 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 NO 2 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 is collected from the new monitoring network, the EPA will reassess attainment status with the one-hour NO 2 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 NO 2 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 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. |
Debt and Financing Arrangement
Debt and Financing Arrangement (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt and Financing Arrangement | 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, along with WPZ and Transcontinental Gas Pipe Line Company, LLC (Transco), as co-borrowers, entered into a new $3.5 billion credit facility. Total letter of credit capacity available to WPZ under the credit facility is $1.125 billion. We may borrow up to $500 million under this credit facility to the extent not otherwise utilized by WPZ and Transco. At June 30, 2015 , no letters of credit have been issued and no loans 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 June 30, 2015 , WPZ had approximately $1.7 billion of outstanding commercial paper. Long-Term Debt Due Within One Year The long-term debt due within one year at June 30, 2015 is associated with the $175 million 7% senior unsecured notes that mature on June 15, 2016. |
Financial Instruments (Notes)
Financial Instruments (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments | 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 $694.5 million and $755.3 million, respectively, at June 30, 2015 , and $694.4 million and $766.5 million, respectively, at December 31, 2014 . |
Transactions with Affiliates (N
Transactions with Affiliates (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Related Party Transactions [Abstract] | |
Transactions with Affiliates | TRANSACTIONS WITH AFFILIATES We are a participant in WPZ’s cash management program. At June 30, 2015 and December 31, 2014 , the advances due to us by WPZ totaled approximately $161.1 million and $135.1 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 0.01 percent at June 30, 2015 . The interest income from these advances was minimal during the three and six months ended June 30, 2015 and June 30, 2014 . 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 $24.9 million and $50.2 million in the three and six months ended June 30, 2015 , respectively, and $25.0 million and $50.4 million in the three and six months ended June 30, 2014 , 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. During the six months ended June 30, 2015 and 2014 , we declared and paid cash distributions to our parent of $88.0 million and $104.0 million , respectively. During July 2015, we declared and paid cash distributions of $41.0 million to our parent. We have entered into various other transactions with certain related parties, the amounts of which were not significant. These transactions and the above-described transactions are made on the basis of commercial relationships and prevailing market prices or general industry practices. |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Parent, total ownership percentage | 60.00% | |
Parent, limited partner ownership percentage | 58.00% | |
Parent, general partner ownership percentage | 2.00% | |
Capital expenditures,net of equity AFUDC [Member] | ||
Prior Period Reclassification Adjustment [Line Items] | ||
Prior Period Reclassification Adjustment | $ (0.8) | |
ContributionsandAdvancesforConstructionCosts [Member] | ||
Prior Period Reclassification Adjustment [Line Items] | ||
Prior Period Reclassification Adjustment | $ 0.8 |
Contingent Liabilities and Co11
Contingent Liabilities and Commitments (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Environmental Matters [Abstract] | ||
Environmental assessment and remediation costs, undiscounted | $ 7.9 | |
Accrued environmental liabilities | $ 7.9 | $ 7.8 |
Debt and Financing Arrangemen12
Debt and Financing Arrangement (Details) - USD ($) | Jun. 30, 2015 | Feb. 02, 2015 |
Williams Partners L.P. [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 3,500,000,000 | |
Commercial paper, outstanding | $ 1,700,000,000 | |
$3.5 billion credit facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, maximum borrowing capacity | 500,000,000 | |
$3.5 billion credit facility [Member] | Williams Partners L.P. [Member] | ||
Line of Credit Facility [Line Items] | ||
Letters of credit outstanding, amount | 0 | |
Line of credit facility, amount outstanding | 0 | |
$3.5 billion credit facility [Member] | Williams Partners L.P. [Member] | Commercial paper [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, maximum borrowing capacity | 3,000,000,000 | |
$3.5 billion credit facility [Member] | Letter of credit | Williams Partners L.P. [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 1,125,000,000 |
Debt and Financing Arrangemen13
Debt and Financing Arrangement Long-term Debt Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Long-term debt due within one year | $ 174,947 | $ 0 |
7% senior unsecured notes | 7.00% | |
7% Senior Unsecured Notes due 2016 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt due within one year | $ 174,947 |
Financial Instruments (Details)
Financial Instruments (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Carrying (reported) amount, fair value disclosure [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt, fair value | $ 694.5 | $ 694.4 |
Estimate of fair value, fair value disclosure [Member] | Fair value, inputs, level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt, fair value | $ 755.3 | $ 766.5 |
Transactions with Affiliates (D
Transactions with Affiliates (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Jul. 30, 2015USD ($) | Jun. 30, 2015USD ($)employee | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)employee | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Related Party Transaction [Line Items] | ||||||
Advances to affiliate | $ 161,147 | $ 161,147 | $ 135,054 | |||
Related party transaction, rate | 0.01% | |||||
Entity number of employees | employee | 0 | 0 | ||||
Related party transaction, expenses from transactions with related party | $ 24,900 | $ 25,000 | $ 50,200 | $ 50,400 | ||
Cash distributions to parent | 88,000 | $ 104,000 | ||||
Williams Partners L.P. [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Advances to affiliate | $ 161,100 | $ 161,100 | $ 135,100 | |||
Subsequent Event [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Cash distributions to parent | $ 41,000 |