Company Quick10K Filing
Northwest Pipeline
Price1.00 EPS-108,583,000
Shares-0 P/E-0
MCap-0 P/FCF-0
Net Debt577 EBIT130
TEV577 TEV/EBIT4
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-04
10-K 2019-12-31 Filed 2020-02-24
10-Q 2019-09-30 Filed 2019-10-31
10-Q 2019-06-30 Filed 2019-08-01
10-Q 2019-03-31 Filed 2019-05-02
10-K 2018-12-31 Filed 2019-02-21
10-Q 2018-09-30 Filed 2018-11-01
10-Q 2018-06-30 Filed 2018-08-02
10-Q 2018-03-31 Filed 2018-05-03
10-K 2017-12-31 Filed 2018-02-22
10-Q 2017-09-30 Filed 2017-11-02
10-Q 2017-06-30 Filed 2017-08-03
10-Q 2017-03-31 Filed 2017-05-04
10-K 2016-12-31 Filed 2017-02-22
10-Q 2016-09-30 Filed 2016-10-31
10-Q 2016-06-30 Filed 2016-08-02
10-Q 2016-03-31 Filed 2016-05-05
10-K 2015-12-31 Filed 2016-02-24
10-Q 2015-09-30 Filed 2015-10-29
10-Q 2015-06-30 Filed 2015-07-30
10-Q 2015-03-31 Filed 2015-04-30
10-K 2014-12-31 Filed 2015-02-25
10-Q 2014-09-30 Filed 2014-10-30
10-Q 2014-06-30 Filed 2014-07-31
10-Q 2014-03-31 Filed 2014-05-01
10-K 2013-12-31 Filed 2014-02-26
10-Q 2013-09-30 Filed 2013-10-31
10-Q 2013-06-30 Filed 2013-07-31
10-Q 2013-03-31 Filed 2013-05-08
10-K 2012-12-31 Filed 2013-02-27
10-Q 2012-09-30 Filed 2012-10-31
10-Q 2012-06-30 Filed 2012-08-02
10-Q 2012-03-31 Filed 2012-04-26
10-K 2011-12-31 Filed 2012-02-27
10-Q 2011-09-30 Filed 2011-11-02
10-Q 2011-06-30 Filed 2011-08-04
10-Q 2011-03-31 Filed 2011-05-05
10-K 2010-12-31 Filed 2011-02-24
10-Q 2010-09-30 Filed 2010-10-28
10-Q 2010-06-30 Filed 2010-07-29
10-Q 2010-03-31 Filed 2010-05-05
10-K 2009-12-31 Filed 2010-02-23
8-K 2018-11-13
8-K 2018-08-24
8-K 2018-08-21
8-K 2018-07-13
8-K 2018-01-30

NWP 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
EX-31.1 nwp20200331ex-311.htm
EX-31.2 nwp20200331ex-312.htm
EX-32 nwp20200331ex-32.htm

Northwest Pipeline Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
2.31.81.40.90.50.02012201420172020
Assets, Equity
0.20.20.10.10.00.02016201720182020
Rev, G Profit, Net Income
0.20.10.0-0.1-0.2-0.32012201420172020
Ops, Inv, Fin

Document
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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, 2020
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)
 
Delaware
 
26-1157701
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
295 Chipeta Way
 
 
Salt Lake City
UT
 
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)
 
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 filer
þ
 
Smaller reporting company
 
Emerging 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
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 1. Legal Proceedings                                                                                                                                          
 
 
 
 
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 novel 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 liabilities, 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 in accordance with our capital expenditure budget;

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;

Changes in the current geopolitical situation;

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

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

Additional risks described in our filings with the Securities and Exchange Commission (SEC).

ii


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, 2020, as supplemented by the disclosure in Part II, Item 1.A. Risk Factors in this Quarterly Report on Form 10-Q.




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,
 
2020
 
2019
OPERATING REVENUES:
 
 
 
Natural gas transportation
$
112,021

 
$
109,883

Natural gas storage
3,346

 
4,242

Other
(21
)
 
(61
)
Total operating revenues
115,346

 
114,064

OPERATING EXPENSES:
 
 
 
General and administrative
12,699

 
12,720

Operation and maintenance
15,499

 
16,315

Depreciation and amortization
28,060

 
26,777

Regulatory debits
291

 
180

Taxes, other than income taxes
4,120

 
3,398

Regulatory charges resulting from tax rate changes
5,814

 
5,814

Other (income) expenses, net
(2
)
 
131

Total operating expenses
66,481

 
65,335

 
 
 
 
OPERATING INCOME
48,865

 
48,729

 
 
 
 
OTHER (INCOME) AND OTHER EXPENSES:
 
 
 
Interest expense
7,451

 
7,184

Allowance for equity and borrowed funds used during construction (AFUDC)
(298
)
 
(506
)
Miscellaneous other (income) expenses, net
(1,092
)
 
(936
)
Total other (income) and other expenses
6,061

 
5,742

 
 
 
 
NET INCOME
$
42,804

 
$
42,987

See accompanying notes.


1


NORTHWEST PIPELINE LLC
BALANCE SHEET
(Thousands of Dollars)
(Unaudited)
 
 
 
March 31,
2020
 
December 31,
2019
ASSETS
 
 
 
 
 
 
 
 
 
CURRENT ASSETS:
 
 
 
 
Cash
 
$

 
$

Receivables:
 
 
 
 
Trade
 
38,677

 
40,066

Affiliated companies
 
80

 
109

Advances to affiliate
 
234,687

 
201,265

Other
 
912

 
1,962

Materials and supplies
 
9,770

 
9,683

Exchange gas due from others
 
2,260

 
5,534

Prepayments and other
 
2,781

 
3,346

Total current assets
 
289,167

 
261,965

 
 
 
 
 
PROPERTY, PLANT AND EQUIPMENT, at cost
 
3,594,941

 
3,593,186

Less-Accumulated depreciation and amortization
 
1,697,283

 
1,673,315

Total property, plant and equipment, net
 
1,897,658

 
1,919,871

 
 
 
 
 
OTHER ASSETS:
 
 
 
 
Deferred charges
 
1,595

 
1,075

Right-of-use assets
 
21,320

 
21,935

Regulatory assets
 
17,754

 
18,101

Total other assets
 
40,669

 
41,111

 
 
 
 
 
Total assets
 
$
2,227,494

 
$
2,222,947

See accompanying notes.

2



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

 
 
March 31,
2020
 
December 31,
2019
LIABILITIES AND MEMBER’S EQUITY
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
Payables:
 
 
 
 
Trade
 
$
8,634

 
$
15,635

Affiliated companies
 
7,864

 
9,172

Accrued liabilities:
 
 
 
 
Taxes, other than income taxes
 
12,426

 
9,913

Interest
 
12,019

 
5,505

Exchange gas due to others
 
684

 
4,468

Customer advances
 
6,872

 
4,109

Other
 
4,902

 
6,990

Total current liabilities
 
53,401

 
55,792

 
 
 
 
 
LONG-TERM DEBT
 
577,284

 
577,045

 
 
 
 
 
OTHER NONCURRENT LIABILITIES:
 
 
 
 
Asset retirement obligations
 
92,590

 
91,251

Regulatory liabilities
 
331,161

 
323,032

Lease liability
 
16,498

 
16,823

Other
 
5,447

 
5,695

Total other noncurrent liabilities
 
445,696

 
436,801

 
 
 
 
 
CONTINGENT LIABILITIES AND COMMITMENTS (Note 3)
 

 

 
 
 
 
 
MEMBER’S EQUITY:
 
 
 
 
Member’s capital
 
1,073,892

 
1,073,892

Retained earnings
 
77,221

 
79,417

Total member’s equity
 
1,151,113

 
1,153,309

 
 
 
 
 
Total liabilities and member’s equity
 
$
2,227,494

 
$
2,222,947

See accompanying notes.


3


NORTHWEST PIPELINE LLC
STATEMENT OF MEMBER’S EQUITY
(Thousands of Dollars)
(Unaudited)
 
 
 
Three months ended March 31,
 
 
2020
 
2019
MEMBER'S CAPITAL:
 
 
 
 
Balance at beginning and end of period
 
$
1,073,892

 
$
1,073,892

RETAINED EARNINGS:
 
 
 
 
Balance at beginning of period
 
79,417

 
46,750

Net income
 
42,804

 
42,987

Cash distributions to parent
 
(45,000
)
 
(21,000
)
Balance at end of period
 
77,221

 
68,737

Total Member's Equity
 
$
1,151,113

 
$
1,142,629






















See accompanying notes.


4


NORTHWEST PIPELINE LLC
STATEMENT OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
 
 
Three months ended March 31,
 
 
2020
 
2019
Cash flows from operating activities:
 
 
 
 
Net income
 
$
42,804

 
$
42,987

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
 
Depreciation and amortization
 
28,060

 
26,777

Regulatory debits
 
291

 
180

Regulatory charges resulting from tax rate changes
 
5,814

 
5,814

Amortization of deferred charges and credits
 
(821
)
 
(346
)
Allowance for equity funds used during construction (equity AFUDC)
 
(241
)
 
(400
)
Changes in current assets and liabilities:
 
 
 
 
Trade and other accounts receivable
 
5,132

 
701

Affiliated receivables
 
29

 
(2
)
Materials and supplies
 
(87
)
 
(37
)
Other current assets
 
3,840

 
6,031

Trade accounts payable
 
(1,676
)
 
(1,521
)
Affiliated payables
 
(1,308
)
 
(17,973
)
Other accrued liabilities
 
578

 
(1,222
)
Changes in noncurrent assets and liabilities:
 
 
 
 
Regulatory liabilities
 
1,079

 
721

Other, net
 
636

 
(161
)
Net cash provided by operating activities
 
84,130

 
61,549

 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Payments for debt issuance costs
 

 
(52
)
Cash distributions to parent
 
(45,000
)
 
(21,000
)
Net cash used in financing activities
 
(45,000
)
 
(21,052
)
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Property, plant and equipment:
 
 
 
 
Capital expenditures*
 
(9,562
)
 
(11,370
)
Contributions and advances for construction costs
 
4,094

 
(29
)
Disposal of property, plant and equipment, net
 
(240
)
 
983

Advances to affiliate, net
 
(33,422
)
 
(30,081
)
Net cash used in investing activities
 
(39,130
)
 
(40,497
)
 
 
 
 
 
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
 
$
(5,520
)
 
$
(9,371
)
Changes in related accounts payable and accrued liabilities
 
(4,042
)
 
(1,999
)
Capital expenditures
 
$
(9,562
)
 
$
(11,370
)
See accompanying notes.

5




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 2019 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.
Rate and Regulatory Matters
Our next general rate case must be filed for new rates to become effective no later than January 1, 2023.
Income Taxes
We generally are not a taxable entity for federal or state and local income tax purposes. The tax on net income is generally borne by our parent, Williams. Net income for financial statement purposes may differ significantly from taxable income of Williams as a result of differences between the tax basis and financial reporting basis of assets and liabilities.
Accounting Standards Issued and Adopted
In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (ASU 2016-13). ASU 2016-13 changed 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 are required to use a forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. We adopted ASU 2016-13 effective January 1, 2020, which primarily applied to our short-term trade receivables. There was no cumulative effect adjustment to retained earnings upon adoption.
The majority of our trade receivable balances are due within 30 days. We monitor the credit quality of our counterparties through review of collection trends, credit ratings, and other analysis, such as bankruptcy monitoring. Financial assets are evaluated as one pool. Changes in counterparty risk factors could lead to reassessment of the composition of our financial assets as one pool. We calculate our allowance for credit losses incorporating an aging method. In estimating our expected credit losses, we utilized historical loss rates over many years. Our expected credit loss estimate considered both internal and external forward-looking commodity price expectations, as well as counterparty credit ratings, and factors impacting their near term liquidity.
Past due accounts are generally written off against the allowance for doubtful accounts only after all collection attempts have been exhausted. We do not have a material amount of significantly aged receivables at March 31, 2020.





6




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.
The following table presents a reconciliation of our contract liabilities:
 
March 31, 2020
 
(Thousands)
Balance at beginning of period
$
5,464

Recognized in Revenue
(213
)
Balance at end of period
$
5,251


Remaining Performance Obligations
The following table presents the transaction price allocated to the remaining performance obligations under certain contracts as of March 31, 2020. These 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 the 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 that will be recognized in future periods. Certain of our contracts contain evergreen provisions for periods beyond the initial term of the contract. The remaining performance obligations as of March 31, 2020, 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, 2020.
 
Contract Liabilities
Remaining Performance Obligations
 
(Thousands)
2020
$
642

$
320,925

2021
938

415,231

2022
1,029

396,834

2023
1,119

363,588

2024
1,218

333,463

Thereafter
305

2,888,950

Total
$
5,251

$
4,718,991


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

7



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, 2020, 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, 2020, 10 compressor stations have been remediated. At March 31, 2020, we had accrued liabilities totaling approximately $1.2 million, $0.2 million recorded in Accrued liabilities - Other and $1.0 million recorded in Other Noncurrent Liabilities - Other in the accompanying Balance Sheet. At December 31, 2019, we had accrued liabilities totaling approximately $1.2 million, $0.1 million recorded in Accrued liabilities - Other and $1.1 million 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 ARRANGEMENT
Credit Facility
We, along with Williams and Transcontinental Gas Pipe Line Company, LLC (Transco) (the “borrowers”), 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, available to the borrowers. At March 31, 2020, no letters of credit have been issued and loans to Williams of $1.7 billion 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 anytime of $4.0 billion of unsecured commercial paper notes. At March 31, 2020, Williams had no outstanding commercial paper.


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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 were $577.3 million and $556.7 million, respectively, at March 31, 2020, and $577.0 million and $637.8 million, respectively, at December 31, 2019.
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, 2020 and December 31, 2019, our advances to Williams totaled approximately $234.7 million and $201.3 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 0.27 percent at March 31, 2020. The interest income from these advances was $0.5 million and $1.0 million for the three months ended March 31, 2020 and 2019, respectively. Such interest income is included in Other (Income) and Other Expenses – Miscellaneous other (income) expenses, net on the accompanying Statement of Net 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 $22.7 million and $22.1 million in the three months ended March 31, 2020 and 2019, 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, 2020 and 2019, we declared and paid cash distributions to our parent of $45.0 million and $21.0 million, respectively.
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.

9


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 2019 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, 2020 and 2019. 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 increased $1.3 million, or 1 percent, in the first three months of 2020 as compared with the first three months of 2019 primarily due to:
$2.1 million higher natural gas transportation revenues as a result of placing the North Seattle Upgrade into service
in November 2019, a new redelivery contract, and an extra billing day in 2020, partly offset by the termination of
several base agreements.    
The increase in natural gas transportation revenues was partly offset by a $0.9 million decrease in natural gas storage
resulting from a decrease in the use of Park and Loan services.
In the periods ended March 31, 2020 and 2019, Transportation services accounted for 97 percent and gas storage services accounted for 3 percent of our operating revenues, and 96 percent and 4 percent, respectively.
Operating Expenses increased $1.1 million, or 2 percent, for the three months of 2020 as compared to the same period in 2019, mostly due to:
$1.3 million of higher depreciation expense as a result of assets being placed into service, primarily the North Seattle
Upgrade,
$0.7 million of higher Ad Valorem taxes due to the absence of a refund received in March 2019,
Partially offset by $0.8 million in lower wages and benefits driven by a voluntary severance program in 2019.
Recent Developments
COVID-19
The outbreak of novel coronavirus (COVID-19) has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. We are monitoring the COVID-19 pandemic and are taking 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. We are continuing to monitor developments with respect to the outbreak and note the following:
Our financial condition, results of operations, and liquidity have not been materially impacted by direct effects of COVID-19.
We believe we have the ability to access the debt market if necessary, and continue to have significant levels of unused capacity on our revolving credit facility with no significant debt maturities in the near future.
We have implemented remote working arrangements where possible and restricted business-related travel. Implementation of these measures has not required material expenditures or significantly impacted our ability to operate our business.
Our remote working arrangements have not significantly impacted our internal controls over financial reporting and disclosure controls and procedures.

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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 2020 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 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, 2019, includes certain risk factors that could materially affect our business, financial condition, or future results. Those Risk Factors have not materially changed except that they are supplemented by the following risk factor:  

We face risks related to the COVID-19 pandemic and other health epidemics.
 The global outbreak of the novel coronavirus (COVID-19) is currently impacting countries, communities, supply chains and markets. We provide a critical service to our customers, which means that it is paramount that we keep our employees safe. To date, COVID-19 has not had a material impact on our business. However, we cannot predict whether, and the extent to which, COVID-19 will have a material impact on our business, including our liquidity, financial condition, and results of operations. COVID-19 could pose a risk to our employees, our customers, our suppliers and the communities in which we operate, which could negatively impact our business. To the extent that our access to the capital markets is adversely affected by COVID-19, we may need to consider alternative sources of funding for our operations and for working capital, any of which could increase our cost of capital. Measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, and shutdowns, may cause us to experience operational delays or to delay plans for growth. The extent to which COVID-19 may impact our business will depend on future developments, which are highly uncertain and cannot be predicted, including new information concerning the severity of COVID-19 and the actions taken to contain it or treat its impact, among others.

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To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other factors described in the Risk Factors disclosed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019.


Item 6. Exhibits
The following instruments are included as exhibits to this report.
 
Exhibit
 
Description
 
 
 
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.



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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
NORTHWEST PIPELINE LLC
 
 
 
 
Registrant
 
 
 
 
 
Date:
May 4, 2020
By:
 
/s/ Billeigh Mark
 
 
 
 
Billeigh Mark

 
 
 
 
Controller
 
 
 
 
(Principal Accounting Officer)