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Northwest Pipeline

Filed: 3 May 21, 4:29pm
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
or
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)
Delaware26-1157701
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
295 Chipeta Way
Salt Lake CityUT84108
(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)
Securities registered pursuant to Section 12(b) of the Act: None
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 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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨Accelerated filer¨Non-accelerated filerþSmaller reporting companyEmerging growth 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.


NORTHWEST PIPELINE LLC
FORM 10-Q
INDEX
 
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.
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 such as “anticipates,” “believes,” “seeks,” “could,” “may,” “should,” “continues,” “estimates,” “expects,” “forecasts,” “intends,” “might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,” “will,” “assumes,” “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:
Our and our affiliates’ future credit ratings;

Amounts and nature of future capital expenditures;

Expansion and growth of our business and operations;

Expected in-service dates for capital projects;

Financial condition and liquidity;

Business strategy;

Cash flow from operations or results of operations;

Rate case filings;
i


Natural gas prices, supply, and demand;

Demand for our services; and

The impact of the coronavirus (COVID-19) pandemic.
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 impact of operational and developmental hazards and unforeseen interruptions;

Development and rate of adoption of alternative energy sources;

The strength and financial resources of our competitors and the effects of competition;

Availability of supplies, including lower than anticipated volumes from third parties, and market demand;

Volatility of pricing including the effect of lower than anticipated energy commodity prices;

Changes in maintenance and construction costs, as well as our ability to obtain sufficient construction-related inputs, including skilled labor;

The impact of existing and future laws and regulations, the regulatory environment, environmental matters, and litigation, as well as our ability to obtain necessary permits and approvals, and achieve favorable rate proceeding outcomes;

Increasing scrutiny and changing expectations from stakeholders with respect to our environmental, social, and governance practices;

The physical and financial risks associated with climate change;

Our exposure to the credit risk of our customers and counterparties;

Our ability to successfully expand our facilities and operations;

Whether we are able to successfully identify, evaluate, and timely execute our capital projects and investment opportunities;

Risks related to financing, including restrictions stemming from debt agreements, future changes in credit ratings as determined by nationally recognized credit rating agencies, and the availability and cost of capital;

Inflation, interest rates, and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on customers and suppliers);

Our costs for defined benefit pension plans and other postretirement benefit plans sponsored by our affiliates;

The risks resulting from outbreaks or other public health crises, including COVID-19;

Changes in the current geopolitical situation;

Changes in U.S. governmental administration and policies;

Risks associated with weather and natural phenomena, including climate conditions and physical damage to our facilities;

Acts of terrorism, cybersecurity incidents, and related disruptions; and
ii


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 announce publicly the result of 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 filed with the SEC on February 24, 2021.



iii

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.

NORTHWEST PIPELINE LLC
STATEMENT OF NET INCOME
(Thousands of Dollars)
(Unaudited)
 
Three months ended
March 31,
20212020
OPERATING REVENUES:
Natural gas transportation$109,277 $112,021 
Natural gas storage3,670 3,346 
Other(53)(21)
Total operating revenues112,894 115,346 
OPERATING EXPENSES:
General and administrative11,670 12,699 
Operation and maintenance16,646 15,499 
Depreciation and amortization28,068 28,060 
Regulatory debits348 291 
Taxes, other than income taxes4,216 4,120 
Regulatory charges resulting from tax rate changes5,814 5,814 
Other (income) expenses, net(31)(2)
Total operating expenses66,731 66,481 
OPERATING INCOME46,163 48,865 
OTHER (INCOME) AND OTHER EXPENSES:
Interest expense7,361 7,451 
Allowance for equity and borrowed funds used during construction (AFUDC)(265)(298)
Miscellaneous other (income) expenses, net(161)(1,092)
Total other (income) and other expenses6,935 6,061 
NET INCOME$39,228 $42,804 
See accompanying notes.

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NORTHWEST PIPELINE LLC
BALANCE SHEET
(Thousands of Dollars)
(Unaudited)
 
March 31,
2021
December 31,
2020
ASSETS
CURRENT ASSETS:
Cash$$
Receivables:
Trade37,283 37,365 
Affiliated companies60 51 
Advances to affiliate265,719 247,869 
Other765 840 
Materials and supplies9,849 9,807 
Exchange gas due from others3,276 4,466 
Prepayments and other3,396 4,078 
Total current assets320,348 304,476 
PROPERTY, PLANT AND EQUIPMENT3,657,039 3,653,792 
Less-Accumulated depreciation and amortization1,785,462 1,761,229 
Total property, plant and equipment, net1,871,577 1,892,563 
OTHER ASSETS:
Deferred charges4,808 3,775 
Regulatory assets19,374 20,022 
Right-of-use assets10,452 10,692 
Total other assets34,634 34,489 
Total assets$2,226,559 $2,231,528 
See accompanying notes.
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NORTHWEST PIPELINE LLC
BALANCE SHEET
(Thousands of Dollars)
(Unaudited)
 
March 31,
2021
December 31,
2020
LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES:
Payables:
Trade$5,636 $16,157 
Affiliated companies7,977 4,110 
Accrued liabilities:
Taxes, other than income taxes14,613 10,905 
Interest12,019 5,505 
Exchange gas due to others1,830 4,557 
Customer advances1,781 539 
Other6,377 6,786 
Total current liabilities50,233 48,559 
LONG-TERM DEBT578,267 578,018 
OTHER NON-CURRENT LIABILITIES:
Asset retirement obligations97,129 95,777 
Regulatory liabilities363,771 355,725 
Lease liability8,158 8,341 
Other4,378 4,713 
Total other non-current liabilities473,436 464,556 
CONTINGENT LIABILITIES AND COMMITMENTS (Note 3)00
MEMBER’S EQUITY:
Member’s capital1,073,892 1,073,892 
Retained earnings50,731 66,503 
Total member’s equity1,124,623 1,140,395 
Total liabilities and member’s equity$2,226,559 $2,231,528 
See accompanying notes.

3

NORTHWEST PIPELINE LLC
STATEMENT OF MEMBER’S EQUITY
(Thousands of Dollars)
(Unaudited)
 
Three months ended March 31,
20212020
MEMBER'S CAPITAL:
Balance at beginning and end of period$1,073,892 $1,073,892 
RETAINED EARNINGS:
Balance at beginning of period66,503 79,417 
Net income39,228 42,804 
Cash distributions to parent(55,000)(45,000)
Balance at end of period50,731 77,221 
Total Member’s Equity$1,124,623 $1,151,113 




































See accompanying notes.

4

NORTHWEST PIPELINE LLC
STATEMENT OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
Three months ended March 31,
20212020
Cash flows from operating activities:
Net income$39,228 $42,804 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization28,068 28,060 
Regulatory debits348 291 
Regulatory charges resulting from tax rate changes5,814 5,814 
Amortization of deferred charges and credits(772)(821)
Allowance for equity funds used during construction (equity AFUDC)(215)(241)
Changes in current assets and liabilities:
Trade and other accounts receivable1,822 5,132 
Affiliated receivables(9)29 
Materials and supplies(42)(87)
Other current assets1,872 3,840 
Trade accounts payable(8,375)(1,676)
Affiliated payables3,867 (1,308)
Other accrued liabilities6,175 578 
Changes in noncurrent assets and liabilities:
Regulatory liabilities957 1,079 
Other, net85 636 
Net cash provided by operating activities78,823 84,130 
Cash flows from financing activities:
Cash distributions to parent(55,000)(45,000)
Net cash used in financing activities(55,000)(45,000)
Cash flows from investing activities:
Property, plant and equipment:
Capital expenditures*(7,426)(9,562)
Contributions and advances for construction costs1,699 4,094 
Disposal of property, plant and equipment, net(246)(240)
Advances to affiliate, net(17,850)(33,422)
Net cash used in investing activities(23,823)(39,130)
NET INCREASE (DECREASE) IN CASH
CASH AT BEGINNING OF PERIOD
CASH AT END OF PERIOD$$
____________________________________
* Increases to property, plant and equipment, exclusive of equity AFUDC$(5,741)$(5,520)
Changes in related accounts payable and accrued liabilities(1,685)(4,042)
Capital expenditures$(7,426)$(9,562)
See accompanying notes.
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NORTHWEST PIPELINE LLC
NOTES TO FINANCIAL STATEMENTS
(Unaudited)


1. BASIS OF PRESENTATION
In this report, Northwest Pipeline LLC (Northwest) is at times referred to in the first person as “we,” “us,” or “our.”
Northwest is indirectly owned by The Williams Companies, Inc. (Williams).
General
The accompanying unaudited financial statements have been prepared from our books and records. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted in this Form 10-Q pursuant to Securities and Exchange Commission rules and regulations. The unaudited financial statements include all normal recurring adjustments and others which, in the opinion of our management, are necessary to present fairly our interim financial statements. These unaudited financial statements should be read in conjunction with the financial statements and notes thereto in our 2020 Annual Report on Form 10-K.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the interim financial statements and accompanying notes. Actual results could differ from those estimates.
2. REVENUE RECOGNITION
Revenue by Category
Our revenue disaggregation by major service line includes Natural gas transportation, Natural gas storage, and Other, which are separately presented on the Statement of Net Income.
Contract Assets
The following table presents a reconciliation of our contract assets:
Three months ended
March 31,
20212020
(Thousands)
Balance at beginning of period$3,395 $554 
Revenue recognized in excess of amounts invoiced1,121 620 
Balance at end of period$4,516 $1,174 
Contract Liabilities
The following table presents a reconciliation of our contract liabilities:
Three months ended
March 31,
20212020
(Thousands)
Balance at beginning of period$4,610 $5,464 
Recognized in Revenue(232)(213)
Balance at end of period$4,378 $5,251 
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Remaining Performance Obligations
Our remaining performance obligations primarily include reservation charges on contracted capacity on our firm transportation and storage contracts with customers. Amounts from certain contracts included in the table below, which are subject to periodic review and approval by the Federal Energy Regulatory Commission (FERC), reflect the rates for such services in our current FERC tariffs for the life of the related contracts; however, these rates may change based on future rate cases or settlements approved by the FERC and the amount and timing of these changes is not currently known. This table excludes the variable consideration component for commodity charges. Certain of our contracts contain evergreen provisions for periods beyond the initial term of the contract. The remaining performance obligations, as of March 31, 2021, do not consider potential future performance obligations for which the renewal has not been exercised. The table below also does not include contracts with customers for which the underlying facilities have not received FERC authorization to be placed into service.
The following table presents the amount of the contract liabilities balance expected to be recognized as revenue when performance obligations are satisfied and the transaction price allocated to the remaining performance obligations under certain contracts as of March 31, 2021.
Contract LiabilitiesRemaining Performance Obligations
(Thousands)
2021 (remainder)$707 $314,230 
20221,029 410,694 
20231,120 365,687 
20241,218 334,497 
2025304 331,136 
Thereafter2,645,508 
Total$4,378 $4,401,752 
Accounts Receivable
Receivables from contracts with customers are included within Receivables - Trade and Receivables - Affiliated companies and receivables that are not related to contracts with customers are included within the balance of Receivables - Advances to affiliate and Receivables - Other in our Balance Sheet.
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 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, 2021, all of the meter stations have been remediated. During 2006 to 2018, 14 compressor stations were evaluated, of which 11 required remediation. As of March 31, 2021, 10 compressor stations have been remediated. At March 31, 2021, we had accrued liabilities totaling approximately $1.1 million, $0.2 million of which is recorded in Accrued liabilities - Other and $0.9 million of which is recorded in Other Noncurrent Liabilities - Other in the accompanying Balance Sheet. At December 31, 2020, we had accrued liabilities totaling approximately $1.1 million, $0.1
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million of which is recorded in Accrued liabilities - Other and $1.0 million of which is recorded in Other Noncurrent Liabilities - Other in the accompanying Balance Sheet. We are conducting environmental assessments and implementing a variety of remedial measures that may result in increases or decreases in the total estimated costs.
The EPA and various state regulatory agencies routinely promulgate and propose new rules, and issue updated guidance to existing rules. These rulemakings include, but are not limited to, rules for reciprocating internal combustion engine and combustion turbine maximum achievable control technology, air quality standards for one-hour nitrogen dioxide emissions, and volatile organic compound and methane new source performance standards impacting design and operation of storage vessels, pressure valves, and compressors. The EPA previously issued its rule regarding National Ambient Air Quality Standards for ground-level ozone. We are monitoring the rule’s implementation as it will trigger additional federal and state regulatory actions that may impact our operations. Implementation of the regulations is expected to result in impacts to our operations and increase the cost of additions to Property, plant, and equipment - net in the Balance Sheet for both new and existing facilities in affected areas. We are unable to reasonably estimate the cost of additions that may be required to meet the regulations at this time due to uncertainty created by various legal challenges to these regulations and the need for further specific regulatory guidance.
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.
4. DEBT AND FINANCING ARRANGEMENTS
Credit Facility
We, along with Williams and Transcontinental Gas Pipe Line Company, LLC (Transco), are party to a credit agreement with aggregate commitments available of $4.5 billion, with up to an additional $500 million increase in aggregate commitments available under certain circumstances. We and Transco are each subject to a $500 million borrowing sublimit. Letter of credit commitments of $1.0 billion are subject to the $500 million borrowing sublimit applicable to us and Transco. At March 31, 2021, 0 letters of credit have been issued and 0 loans were outstanding under the credit facility.
Williams participates in a commercial paper program and Williams’ 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 $4.0 billion of unsecured commercial paper notes. At March 31, 2021, Williams had 0 outstanding commercial paper.
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:
Short-term financial assets—The carrying values of short-term financial assets (advances to affiliate) that have variable interest rates, accounts receivable and accounts payable 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 were $578.3 million and $661.5 million, respectively, at March 31, 2021, and $578.0 million and $680.6 million, respectively, at December 31, 2020.
8

6. TRANSACTIONS WITH AFFILIATES
We are a participant in Williams’ cash management program, and we make advances to and receive advances from Williams. At March 31, 2021 and December 31, 2020, our advances to Williams totaled approximately $265.7 million and $247.9 million, respectively. These advances are represented by demand notes and are classified as Receivables - Advances to affiliate in the accompanying Balance Sheet. The interest rate on these intercompany demand notes is based upon the daily overnight investment rate paid on Williams’ excess cash at the end of each month, which was 0.01 percent at March 31, 2021. The interest income from these advances was minimal and $0.5 million for the three months ended March 31, 2021 and 2020, respectively. Such interest income is included in Other (Income) and Other Expenses – Miscellaneous other (income) expenses, net on the accompanying Statement of Net Income.
Included in Operating Revenues in the accompanying Statement of Net Income are revenues received from affiliates of $0.4 million and $0.2 million for the three months ended March 31, 2021 and 2020, respectively. The rates charged to provide services to affiliates are the same as those that are charged to similarly-situated nonaffiliated customers.
We have 0 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 $22.1 million and $22.7 million in the three months ended March 31, 2021 and 2020, respectively, for these services. Such expenses are primarily included in General and administrative and Operation and maintenance expenses on the accompanying Statement of Net Income.
During the three months ended March 31, 2021 and 2020, we declared and paid cash distributions to our parent of $55.0 million and $45.0 million, respectively. During April 2021, we declared and paid an additional cash distribution of $44.0 million to our parent.
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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 2020 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, 2021 and 2020. 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.
Operating Revenues decreased $2.5 million, or approximately 2 percent, in the first three months of 2021 as compared to the same period in 2020 primarily due to:
$2.7 million lower natural gas transportation revenues as a result of lower firm transportation demand ($4.0 million) primarily resulting from the termination of two base agreements in the third quarter of 2020, partially offset by higher short-term firm transportation demand due to Winter Storm Uri ($1.3 million).
The decrease in natural gas transportation revenues was partially offset by $0.3 million in higher storage revenues, with higher park and loan services in 2021 and higher capacity releases at the Clay Basin storage facility.
Transportation services accounted for 97 percent and gas storage services accounted for 3 percent of our operating revenues for both periods ended March 31, 2021 and 2020.
Operating Expenses increased $0.3 million, or less than 1 percent, in the first three months of 2021 as compared to the same period in 2020, primarily due to:
$1.1 million of higher operating and maintenance costs mostly attributable to higher measurement software maintenance and site rentals, and higher transmission related expenses including contract labor and right of way expenses.
The increase in operating maintenance costs were mostly offset by $1.0 million of lower general and administrative expenses, including lower building rent, a decrease in outside services, and lower salaries and wages partially offset by higher employee benefits accrual.
Other (income) and other expenses, net had an unfavorable change of $0.9 million, or approximately 14 percent, in the first three months of 2021 as compared to the same period in 2020 primarily due to lower interest income on our note with Williams.
Recent Developments
COVID-19
The outbreak of COVID-19 has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. We continue to monitor the COVID-19 pandemic and have taken steps intended to protect the safety of our customers, employees and communities, and to support the continued delivery of safe and reliable service to our customers and the communities we serve. Our financial condition, results of operations, and liquidity have not been materially impacted by direct effects of COVID-19.

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Item 4. Controls and Procedures
Our management, including our Senior Vice President 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 of 1934, as amended) (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 and our Vice President and Chief Accounting Officer. Based upon that evaluation, our Senior Vice President 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 2021 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
Environmental
While it is not possible for us to predict the final outcome of any pending legal proceedings involving governmental authorities under federal, state, and local laws regulating the discharge of materials into the environment, we do not anticipate a material effect on our financial position if we were to receive an unfavorable outcome in any one or more of such proceedings. Our threshold for disclosing material environmental legal proceedings involving a governmental authority where potential monetary sanctions are involved is $1 million.
Other
The additional information called for by this item is provided in Note 3. 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, 2020 includes certain risk factors that could materially affect our business, financial condition, or future results. Those Risk Factors have not materially changed.  




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Item 6. Exhibits
The following instruments are included as exhibits to this report.
 
ExhibitDescription
2
3.1
3.2
31.1*
31.2*
32**
101.INS*XBRL Instance Document. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL 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.
104*Cover Page Interactive Data File. The cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document (contained in Exhibit 101).
*Filed herewith.
**Furnished herewith.


12

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
Date:May 3, 2021By:/s/ Billeigh W. Mark
Billeigh W. Mark
Controller
(Principal Accounting Officer)