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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,~~June 30, 2022


☐			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 1-7584

Transcontinental Gas Pipe Line Company, LLC

(Exact name of registrant as specified in its charter)

Delaware

74-1079400

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

2800 Post Oak Boulevard

Houston, Texas

77056

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (713) 215-2000

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 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 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

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 INSTRUCTIONS H (1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM 10-Q WITH THE REDUCED DISCLOSURE FORMAT.


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Transcontinental Gas Pipe Line Company, LLC

Index


			Page
Part I. Financial Information
Item 1. Financial Statements
~~Condensed~~ Statement of Net Income –~~Three~~ –Three and Six Months Ended ~~March 31, 202~~2 June 30, 2022 and ~~202~~20211			4
~~Condensed~~ Balance Sheet –~~March 31, 202~~2 June 30, 2022 and December 31, ~~202~~20211			5
~~Condensed~~ Statement of ~~Cha~~n ~~ges~~Changes in Member’s Equity – Three – ~~Three~~and Six Months Ended ~~March 31~~June 30 , ~~202~~2 2022 and ~~202~~12021			7
~~Condensed~~ Statement of Cash Flows – –Six ~~Three~~Months Ended ~~March 31~~June 30 , ~~202~~2 2022 and 2021
Notes to ~~Condensed~~ Financial Statements			9
Note 1 – Basis of Presentation			9
Note 2 – Revenue Recognition			9
Note 3 – Contingent Liabilities and Commitments			10
Note 4 – Debt and Financing Arrangements			11
Note 5 – ARO Trust			12
Note 6 – Fair Value Measurements			13
Note 7 – Transactions with Affiliates			13
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			15
Item 4. Controls and Procedures			17
Part II. Other Information			17
Item 1. Legal Proceedings			17
Item 1A. Risk Factors			17
Item 6. Exhibits			2019

Forward Looking Statements

The reports, filings, and other public announcements of Transcontinental Gas Pipe Line Company, 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;


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•~~Expected in-service dates for capital projects;~~

•Financial condition and liquidity;

•Business strategy;

•Cash flow from operations or results of operations;

•Rate case filings;

•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;


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•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, including the Russian invasion of Ukraine;

•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

•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 for the year ended December 31, 2021, as filed with the SEC on February 28, 2022, as supplemented by ~~the disclosure~~disclosures in Part II, Item 1A. Risk Factors in ~~this~~subsequent Quarterly ~~Report~~Reports on Form 10-Q.


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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Transcontinental Gas Pipe Line Company, LLC

~~Condensed~~ Statement of Net Income

(Unaudited)


		Three Months Ended March 31,					Three Months Ended June 30,		Six Months Ended June 30,
			2022		2021				2022		2021		2022		2021
			(Thousands)						(Thousands)
Operating Revenues:	Operating Revenues:							Operating Revenues:
Natural gas sales	Natural gas sales		$	15,645	$	14,224		Natural gas sales	$	43,371	$	16,003	$	59,016	$	30,227
Natural gas transportation	Natural gas transportation		621,537		582,557			Natural gas transportation	614,043		571,245		1,235,580		1,153,802
Natural gas storage	Natural gas storage		44,158		42,502			Natural gas storage	49,159		41,357		93,317		83,859
Other	Other		5,128		4,494			Other	3,151		2,634		8,279		7,128
Total operating revenues	Total operating revenues		686,468		643,777			Total operating revenues	709,724		631,239		1,396,192		1,275,016

Operating Costs and Expenses:	Operating Costs and Expenses:							Operating Costs and Expenses:
Cost of natural gas sales	Cost of natural gas sales		15,645		14,224			Cost of natural gas sales	43,371		16,003		59,016		30,227

Operation and maintenance	Operation and maintenance		111,296		96,084			Operation and maintenance	129,019		95,831		240,315		191,915
Administrative and general	Administrative and general		51,549		50,753			Administrative and general	57,090		46,424		108,639		97,177
Depreciation and amortization	Depreciation and amortization		132,562		117,797			Depreciation and amortization	130,670		117,759		263,232		235,556
Taxes — other than income taxes	Taxes — other than income taxes		27,114		24,528			Taxes — other than income taxes	25,727		24,418		52,841		48,946

Regulatory credit resulting from tax rate changes	Regulatory credit resulting from tax rate changes		(7,688)		(7,688)			Regulatory credit resulting from tax rate changes	(7,688)		(7,688)		(15,376)		(15,376)
Other (income) expense, net	Other (income) expense, net		(10,888)		1,423			Other (income) expense, net	(7,360)		3,254		(18,248)		4,677
Total operating costs and expenses	Total operating costs and expenses		319,590		297,121			Total operating costs and expenses	370,829		296,001		690,419		593,122

Operating Income	Operating Income		366,878		346,656			Operating Income	338,895		335,238		705,773		681,894

Other (Income) and Other Expenses:	Other (Income) and Other Expenses:							Other (Income) and Other Expenses:
Interest expense	Interest expense		82,437		80,175			Interest expense	82,184		80,260		164,621		160,435

Interest income								Interest income	(4,542)		(1,184)		(5,644)		(2,071)

Allowance for equity and borrowed funds used during construction (AFUDC)	Allowance for equity and borrowed funds used during construction (AFUDC)		(4,857)		(3,997)			Allowance for equity and borrowed funds used during construction (AFUDC)	(5,793)		(5,724)		(10,650)		(9,721)

Miscellaneous other expense, net			897		52
Miscellaneous other (income) expense, net								Miscellaneous other (income) expense, net	1,459		1,085		3,458		2,024
Total other (income) and other expenses	Total other (income) and other expenses		78,477		76,230			Total other (income) and other expenses	73,308		74,437		151,785		150,667

Net Income	Net Income		$	288,401	$	270,426		Net Income	$	265,587	$	260,801	$	553,988	$	531,227

See accompanying notes.


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Transcontinental Gas Pipe Line Company, LLC

~~Condensed~~ Balance Sheet

(Unaudited)


		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
		(Thousands)					(Thousands)
ASSETS	ASSETS					ASSETS
Current Assets:	Current Assets:					Current Assets:
Cash	Cash	$	—	$	—	Cash	$	—	$	—
Receivables:	Receivables:					Receivables:
Affiliates		5,575		6,978
Advances to affiliate	Advances to affiliate	1,941,659		1,669,368		Advances to affiliate	2,010,313		1,669,368
Trade	Trade	216,736		234,680		Trade	224,060		234,680
Affiliates						Affiliates	8,731		6,978
Other (less allowance of $6,229 and $6,222 in 2022 and 2021, respectively)	Other (less allowance of $6,229 and $6,222 in 2022 and 2021, respectively)	10,685		12,977		Other (less allowance of $6,229 and $6,222 in 2022 and 2021, respectively)	7,335		12,977
Transportation and exchange gas receivables	Transportation and exchange gas receivables	3,623		7,685		Transportation and exchange gas receivables	13,511		7,685
Inventories		58,147		54,437
Inventories:						Inventories:
Materials and supplies, at average cost						Materials and supplies, at average cost	42,996		41,189
Gas available for customer nomination, at average cost						Gas available for customer nomination, at average cost	27,341		12,553
Gas in storage, at original cost						Gas in storage, at original cost	744		695
Regulatory assets	Regulatory assets	132,401		114,351		Regulatory assets	125,672		114,351
Other	Other	14,179		17,058		Other	8,546		17,058
Total current assets	Total current assets	2,383,005		2,117,534		Total current assets	2,469,249		2,117,534

Property, Plant and Equipment:
Natural gas transmission plant		17,750,482		17,713,050
Property, plant and equipment						Property, plant and equipment	17,859,476		17,713,050
Less-Accumulated depreciation and amortization	Less-Accumulated depreciation and amortization	5,293,340		5,227,128		Less-Accumulated depreciation and amortization	5,385,537		5,227,128
Total property, plant and equipment, net	Total property, plant and equipment, net	12,457,142		12,485,922		Total property, plant and equipment, net	12,473,939		12,485,922

Other Assets:	Other Assets:					Other Assets:
Regulatory assets	Regulatory assets	275,356		253,081		Regulatory assets	307,679		253,081
Right-of-use assets	Right-of-use assets	65,985		68,817		Right-of-use assets	62,819		68,817
Other	Other	280,336		292,957		Other	260,743		292,957
Total other assets	Total other assets	621,677		614,855		Total other assets	631,241		614,855

Total assets	Total assets	$	15,461,824	$	15,218,311	Total assets	$	15,574,429	$	15,218,311

(continued)

See accompanying notes.


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Transcontinental Gas Pipe Line Company, LLC

~~Condensed~~ Balance Sheet

(Unaudited)


		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
		(Thousands)					(Thousands)
LIABILITIES AND MEMBER’S EQUITY	LIABILITIES AND MEMBER’S EQUITY					LIABILITIES AND MEMBER’S EQUITY
Current Liabilities:	Current Liabilities:					Current Liabilities:
Payables:	Payables:					Payables:
Trade						Trade	$	171,339	$	163,001
Affiliates	Affiliates	$	57,882	$	69,128	Affiliates	52,352		69,128
Trade and other		113,094		184,405
Cash overdrafts						Cash overdrafts	11,591		21,404
Transportation and exchange gas payables	Transportation and exchange gas payables	6,112		10,125		Transportation and exchange gas payables	8,575		10,125
Accrued liabilities:						Accrued liabilities:
Interest						Interest	76,561		76,656
Asset retirement obligations						Asset retirement obligations	57,327		58,418
Regulatory liabilities	Regulatory liabilities	57,781		57,369		Regulatory liabilities	56,989		57,369
Accrued liabilities		184,153		223,013
Property and other taxes						Property and other taxes	27,617		26,470
Customer deposits						Customer deposits	20,771		21,004
Customer advances						Customer advances	10,108		14,582
Other						Other	20,136		25,883
Long-term debt due within one year	Long-term debt due within one year	26,182		25,594		Long-term debt due within one year	26,784		25,594
Total current liabilities	Total current liabilities	445,204		569,634		Total current liabilities	540,150		569,634

Long-Term Debt	Long-Term Debt	5,265,835		5,269,024		Long-Term Debt	5,261,979		5,269,024

Other Long-Term Liabilities:	Other Long-Term Liabilities:					Other Long-Term Liabilities:
Regulatory liabilities						Regulatory liabilities	942,624		932,101
Asset retirement obligations	Asset retirement obligations	470,884		459,969		Asset retirement obligations	476,193		459,969
Regulatory liabilities		937,771		932,101
Contract liabilities	Contract liabilities	191,826		194,464		Contract liabilities	189,185		194,464
Lease liability	Lease liability	66,985		68,582		Lease liability	65,289		68,582
Other	Other	4,210		4,281		Other	4,313		4,281
Total other long-term liabilities	Total other long-term liabilities	1,671,676		1,659,397		Total other long-term liabilities	1,677,604		1,659,397

Contingent Liabilities and Commitments (Note 3)	Contingent Liabilities and Commitments (Note 3)	0		0		Contingent Liabilities and Commitments (Note 3)	0		0

Member’s Equity:	Member’s Equity:					Member’s Equity:
Member’s capital	Member’s capital	5,088,499		4,960,499		Member’s capital	5,088,499		4,960,499
Retained earnings	Retained earnings	2,990,610		2,759,757		Retained earnings	3,006,197		2,759,757
Total member’s equity	Total member’s equity	8,079,109		7,720,256		Total member’s equity	8,094,696		7,720,256

Total liabilities and member’s equity	Total liabilities and member’s equity	$	15,461,824	$	15,218,311	Total liabilities and member’s equity	$	15,574,429	$	15,218,311

See accompanying notes.


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Transcontinental Gas Pipe Line Company, LLC

~~Condensed~~ Statement of Changes in Member’s Equity

(Unaudited)


		Three Months Ended March 31,				Three Months Ended June 30,
		2022		2021				2022		2021
		(Thousands)						(Thousands)
Member’s Capital:	Member’s Capital:						Member’s Capital:
Balance at beginning of period	Balance at beginning of period	$	4,960,499	$	4,543,499		Balance at beginning of period	$	5,088,499	$	4,603,499
Cash contributions from parent	Cash contributions from parent	128,000		60,000			Cash contributions from parent	—		73,000

Balance at end of period	Balance at end of period	5,088,499		4,603,499			Balance at end of period	5,088,499		4,676,499
Retained Earnings:	Retained Earnings:						Retained Earnings:
Balance at beginning of period	Balance at beginning of period	2,759,757		2,037,320			Balance at beginning of period	2,990,610		2,307,746
Net income	Net income	288,401		270,426			Net income	265,587		260,801
Cash distributions to parent	Cash distributions to parent	(57,548)		—			Cash distributions to parent	(250,000)		(231,370)

Balance at end of period	Balance at end of period	2,990,610		2,307,746			Balance at end of period	3,006,197		2,337,177
Total Member’s Equity	Total Member’s Equity	$	8,079,109	$	6,911,245		Total Member’s Equity	$	8,094,696	$	7,013,676

								Six Months Ended June 30,
								2022		2021
								(Thousands)
Member’s Capital:							Member’s Capital:
Balance at beginning of period							Balance at beginning of period	$	4,960,499	$	4,543,499
Cash contributions from parent							Cash contributions from parent	128,000		133,000
Balance at end of period							Balance at end of period	5,088,499		4,676,499
Retained Earnings:							Retained Earnings:
Balance at beginning of period							Balance at beginning of period	2,759,757		2,037,320
Net income							Net income	553,988		531,227
Cash distributions to parent							Cash distributions to parent	(307,548)		(231,370)
Balance at end of period							Balance at end of period	3,006,197		2,337,177
Total Member’s Equity							Total Member’s Equity	$	8,094,696	$	7,013,676

See accompanying notes.


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Transcontinental Gas Pipe Line Company, LLC

~~Condensed~~ Statement of Cash Flows

(Unaudited)


		Three Months Ended March 31,					Six Months Ended June 30,
		2022		2021			2022		2021
		(Thousands)					(Thousands)
OPERATING ACTIVITIES:	OPERATING ACTIVITIES:					OPERATING ACTIVITIES:
Net income	Net income	$	288,401	$	270,426	Net income	$	553,988	$	531,227
Adjustments to reconcile net cash provided (used) by operating activities:	Adjustments to reconcile net cash provided (used) by operating activities:					Adjustments to reconcile net cash provided (used) by operating activities:
Depreciation and amortization	Depreciation and amortization	132,562		117,797		Depreciation and amortization	263,232		235,556
Allowance for equity funds used during construction (equity AFUDC)	Allowance for equity funds used during construction (equity AFUDC)	(3,834)		(3,052)		Allowance for equity funds used during construction (equity AFUDC)	(8,555)		(7,481)
Regulatory credit resulting from tax rate changes	Regulatory credit resulting from tax rate changes	(7,688)		(7,688)		Regulatory credit resulting from tax rate changes	(15,376)		(15,376)
Changes in operating assets and liabilities:
Receivables — affiliates		1,403		(277)
— trade and other		20,229		10,046
Transportation and exchange gas receivable		4,062		(3,051)
Changes in current assets and liabilities:						Changes in current assets and liabilities:
Affiliate receivables						Affiliate receivables	(1,753)		(641)
Trade and other accounts receivable						Trade and other accounts receivable	16,255		11,855
Transportation and exchange gas receivables						Transportation and exchange gas receivables	(5,826)		(4,129)
Inventories	Inventories	(3,710)		(4,313)		Inventories	(16,644)		(12,698)
Payables — affiliates		(11,246)		12,511
— trade		(44,264)		(26,077)
Regulatory assets						Regulatory assets	(11,321)		(11,912)
Other current assets						Other current assets	8,512		(1,077)
Affiliate payables						Affiliate payables	(16,776)		14,782
Trade accounts payable						Trade accounts payable	(9,122)		8,135
Transportation and exchange gas payables						Transportation and exchange gas payables	(1,550)		1,988
Accrued liabilities	Accrued liabilities	(38,489)		(22,381)		Accrued liabilities	(6,400)		27

Asset retirement obligations		3,380		4,653
Contract liabilities		(2,638)		(2,638)
Other, net		(21,507)		2,748
Net cash provided by operating activities		316,661		348,704

Other, including changes in long-term assets and liabilities						Other, including changes in long-term assets and liabilities	(11,571)		34,440
Net cash provided (used) by operating activities						Net cash provided (used) by operating activities	737,093		784,696

FINANCING ACTIVITIES:	FINANCING ACTIVITIES:					FINANCING ACTIVITIES:

Proceeds from other financing obligations	Proceeds from other financing obligations	2,843		817		Proceeds from other financing obligations	5,148		1,790

Payments on other financing obligations	Payments on other financing obligations	(6,136)		(5,430)		Payments on other financing obligations	(12,412)		(10,984)
Payments for debt issuance costs	Payments for debt issuance costs	(16)		(32)		Payments for debt issuance costs	(16)		(32)
Cash distributions to parent	Cash distributions to parent	(57,548)		—		Cash distributions to parent	(307,548)		(231,370)
Cash contributions from parent	Cash contributions from parent	128,000		60,000		Cash contributions from parent	128,000		133,000

Net cash provided by financing activities		67,143		55,355
Net cash provided (used) by financing activities						Net cash provided (used) by financing activities	(186,828)		(107,596)

INVESTING ACTIVITIES:	INVESTING ACTIVITIES:					INVESTING ACTIVITIES:
Property, plant and equipment:						Property, plant and equipment:
Capital expenditures (1)	Capital expenditures (1)	(97,124)		(89,200)		Capital expenditures (1)	(185,045)		(231,903)
Contributions and advances for construction costs, net	Contributions and advances for construction costs, net	(4,655)		12,454		Contributions and advances for construction costs, net	(2,279)		26,388
Disposal of property, plant and equipment, net	Disposal of property, plant and equipment, net	(5,940)		(1,635)		Disposal of property, plant and equipment, net	(14,028)		(8,966)
Advances to affiliate, net	Advances to affiliate, net	(272,291)		(326,104)		Advances to affiliate, net	(340,945)		(460,120)
Purchase of ARO Trust investments	Purchase of ARO Trust investments	(4,875)		(14,573)		Purchase of ARO Trust investments	(10,127)		(17,925)
Proceeds from sale of ARO Trust investments	Proceeds from sale of ARO Trust investments	1,081		14,999		Proceeds from sale of ARO Trust investments	2,159		15,426
Net cash used by investing activities		(383,804)		(404,059)
Net cash provided (used) by investing activities						Net cash provided (used) by investing activities	(550,265)		(677,100)

Increase (decrease) in cash	Increase (decrease) in cash	—		—		Increase (decrease) in cash	—		—
Cash at beginning of period	Cash at beginning of period	—		—		Cash at beginning of period	—		—
Cash at end of period	Cash at end of period	$	—	$	—	Cash at end of period	$	—	$	—
_______________________	_______________________					_______________________
(1) Increase to property, plant and equipment, exclusive of equity AFUDC		$	(65,262)	$	(84,631)
(1) Increases to property, plant and equipment, exclusive of equity AFUDC						(1) Increases to property, plant and equipment, exclusive of equity AFUDC	$	(187,384)	$	(235,046)
Changes in related accounts payable and accrued liabilities	Changes in related accounts payable and accrued liabilities	(31,862)		(4,569)		Changes in related accounts payable and accrued liabilities	2,339		3,143
Capital expenditures	Capital expenditures	$	(97,124)	$	(89,200)	Capital expenditures	$	(185,045)	$	(231,903)

See accompanying notes.


			Table of Contents

Transcontinental Gas Pipe Line Company, LLC

Notes to ~~Condensed~~ Financial Statements

(Unaudited)

Note 1 – Basis of Presentation

In this report, Transcontinental Gas Pipe Line Company, LLC (Transco) is at times referred to in the first person as “we,” “us” or “our.”

Transco is indirectly owned by The Williams Companies, Inc. (Williams), a publicly traded Delaware corporation. We own and operate an interstate natural gas pipeline system that is regulated by the Federal Energy Regulatory Commission (FERC).

General

~~The~~Our accompanying ~~condensed unaudited~~interim financial statements ~~have been prepared from~~do not include all the notes in our ~~books and records. Certain information and footnote disclosures normally included in~~annual financial statements ~~prepared~~and, therefore, should be read in ~~accordance~~conjunction with ~~accounting principles generally accepted~~our financial statements and notes thereto for the year ended December 31, 2021, in ~~the United States (GAAP) have been condensed or omitted in this~~our Annual Report on Form ~~10-Q pursuant to Securities and Exchange Commission rules and regulations.~~10-K. The ~~condensed~~accompanying unaudited financial statements include all normal recurring adjustments and others ~~which,~~that, in the opinion of ~~our~~ management, are necessary to present fairly our interim financial statements. ~~These condensed unaudited financial statements should be read in conjunction with the financial statements and the notes thereto included in our 2021 Annual Report on Form 10-K.~~

The preparation of financial statements in conformity with ~~GAAP~~accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in ~~the condensed unaudited~~our financial statements and accompanying notes. Actual results could differ from those estimates.

ACertain reclassifications have been made to information from previous years to conform to the current presentation, including a reclassification within Operating Costs and Expenses on the ~~Condensed~~ Statement of Net Income to include Cost of natural gas transportation within Operation and maintenance of approximately ~~$17.6~~$13.9 million and $31.5 million for the three and six months ended ~~March 31,~~June 30, 2021, ~~has been made to conform to the 2022 presentation.~~respectively.

Note 2 – Revenue Recognition

Revenue by Category

Our revenue disaggregation by major service line includes Natural gas sales, Natural gas transportation, Natural gas storage, and Other, which are separately presented on the ~~Condensed~~ Statement of Net Income.

Contract Liabilities

The following table presents a reconciliation of our contract liabilities:


		Three Months Ended March 31,					Three Months Ended June 30,		Six Months Ended June 30,
			2022		2021				2022		2021		2022		2021
			(Thousands)				(Thousands)
Balance at beginning of period	Balance at beginning of period		$	205,030	$	215,596		Balance at beginning of period	$	202,392	$	212,958	$	205,030	$	215,596
Recognized in revenue	Recognized in revenue		(2,638)		(2,638)			Recognized in revenue	(2,641)		(2,641)		(5,279)		(5,279)
Balance at end of period	Balance at end of period		$	202,392	$	212,958		Balance at end of period	$	199,751	$	210,317	$	199,751	$	210,317


Notes (Continued)			Table of Contents

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 FERC, reflect the rates for such services in our current FERC tariffs, net of estimated reserve for refund, for the life of the related contracts; however, these rates may change based on future tariffs approved by the ~~FERC and the amount and timing of these changes is not currently known.~~FERC. This table excludes the variable consideration component for commodity charges. Certain of our contracts contain evergreen and other renewal provisions for periods beyond the initial term of the contract. The remaining performance obligations as of ~~March 31,~~June 30, 2022 do not consider potential future performance obligations for which the renewal has not been exercised and exclude 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,~~June 30, 2022.


		Contract Liabilities		Remaining Performance Obligations			Contract Liabilities		Remaining Performance Obligations
		(Thousands)					(Thousands)
2022 (nine months)		$	7,927	$	1,862,423
2022 (six months)						2022 (six months)	$	5,286	$	1,268,588
2023 (one year)	2023 (one year)	10,566		2,310,342		2023 (one year)	10,566		2,369,372
2024 (one year)	2024 (one year)	10,568		2,179,510		2024 (one year)	10,568		2,201,498
2025 (one year)	2025 (one year)	10,566		1,739,032		2025 (one year)	10,566		1,872,146
2026 (one year)	2026 (one year)	10,566		1,578,189		2026 (one year)	10,566		1,585,109
Thereafter 00	Thereafter 00	152,199		12,137,882		Thereafter 00	152,199		12,139,572
Total	Total	$	202,392	$	21,807,378	Total	$	199,751	$	21,436,285

Accounts Receivable

Receivables from contracts with customers are included within Receivables - Trade and Receivables - Affiliates, and receivables that are not related to contracts with customers are included within the balance of Receivables - Advances to affiliate and Receivables - Other on our ~~Condensed~~ Balance Sheet.

Note 3 – Contingent Liabilities and Commitments

Environmental Matters

We have had studies underway for many years to test some of our facilities for the presence of toxic and hazardous substances such as polychlorinated biphenyls (PCBs) and mercury to determine to what extent, if any, remediation may be necessary. We have also similarly evaluated past on-site disposal of hydrocarbons at a number of our facilities. We have worked closely with and responded to data requests from the U.S. Environmental Protection Agency (EPA) and state agencies regarding such potential contamination of certain of our sites. We are conducting environmental assessments and implementing a variety of remedial measures that may result in increases or decreases in the total estimated costs. At ~~March 31,~~June 30, 2022, we had a balance of approximately ~~$2.5~~$2.7 million for the expense portion of these estimated costs, ~~$0.6~~$0.9 million recorded in Accrued liabilities - Otherand ~~$1.9~~$1.8 million recorded in Other Long-Term Liabilities - Other on the ~~Condensed~~ Balance Sheet. At December 31, 2021, we had a balance of approximately $2.5 million for the expense portion of these estimated costs, $0.7 million recorded in Accrued liabilities - Otherand $1.8 million recorded in Other Long-Term Liabilities - Other on the ~~Condensed~~ Balance Sheet.


Notes (Continued)			Table of Contents

We have been identified as a potentially responsible party (PRP) at various Superfund and state waste disposal sites. Based on present volumetric estimates and other factors, our estimated aggregate exposure for remediation of these sites is less than $0.5 million. The estimated remediation costs for all of these sites are included in the environmental liabilities discussed above. Liability under the Comprehensive Environmental Response, Compensation and Liability Act and applicable state law can be joint and several with other PRPs. Although volumetric allocation is a factor in assessing liability, it is not necessarily determinative; thus, the ultimate liability could be substantially greater than the amounts described above.

The EPA and various state regulatory agencies routinely propose and promulgate 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, review and updates to the National Ambient Air Quality Standards, and rules for new and existing source performance standards for volatile organic compounds and methane. We continuously monitor these regulatory changes and how they may impact our operations. Implementation of new or modified regulations may result in impacts to our operations and increase the cost additions to Total property, plant, and equipment, net on the ~~Condensed~~ Balance Sheet for both new and existing facilities in affected areas; however, due to regulatory uncertainty on final rule content and applicability timeframes, we are unable to reasonably estimate the cost of these regulatory impacts at this time.

We consider prudently incurred environmental assessment and remediation costs and the costs associated with compliance with environmental standards to be recoverable through rates. To date, we have been permitted recovery of environmental costs, and it is our intent to continue seeking recovery of such costs through future rate filings.

Other Matters

Various other proceedings are pending against us and are considered incidental to our operations.

Summary

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

Note 4 – Debt and Financing Arrangements

Credit Facility

We, along with Williams and Northwest Pipeline LLC (Northwest), are party to a credit agreement with aggregate commitments available of $3.75 billion, with up to an additional $500 million increase in aggregate commitments available under certain circumstances. We and Northwest are each able to borrow up to $500 million under the credit facility to the extent not otherwise utilized by the other co-borrowers. At June 30, 2022, 0 letters of credit have been issued and 0 loans were outstanding under the credit facility.

Commercial Paper

Williams participates in a $3.5 billion commercial paper program, and Williams’ management considers amounts outstanding under this program to be a reduction of available capacity under the credit facility. At ~~March 31,~~June 30, 2022, ~~Williams had 0~~$1.040 billion was outstanding under Williams’ commercial ~~paper.~~paper program.

~~Credit Facility~~

We, along with Williams and Northwest Pipeline LLC, are party to a credit agreement with aggregate commitments available of $3.75 billion, with up to an additional $500 million increase in aggregate commitments available under certain circumstances. We and Northwest Pipeline LLC are each able to borrow up to $500 million under the credit facility to the extent not otherwise utilized by the other co-borrowers. At March 31, 2022, 0 letters of credit have been issued and 0 loans were outstanding under the credit facility.


Notes (Continued)			Table of Contents

Other Financing Obligations

Dalton Expansion Project

At ~~March 31,~~June 30, 2022 and December 31, 2021, the amount included in Long-Term Debt on the ~~Condensed~~ Balance Sheet for this financing obligation ~~is $251.2~~was $250.6 million and $251.9 million, respectively, and the amount included in Long-term debt due within one year on the ~~Condensed~~ Balance Sheet for this financing obligation is $2.6 million and $2.5 million, respectively.

Atlantic Sunrise Project

During the first ~~three~~six months of 2022 and 2021, we received an additional ~~$0.3~~$1.3 million and ~~$0.8~~$1.8 million, respectively, of funding from a co-owner for its proportionate share of construction costs related to its undivided ownership interest in certain parts of the project. This additional funding is reflected in Long-Term Debt on the ~~Condensed~~ Balance Sheet. At ~~March 31,~~June 30, 2022 and December 31, 2021, the amount included in Long-Term Debt on the ~~Condensed~~ Balance Sheet for this financing obligation ~~is $801.5~~was $796.4 million and $807.1 million, respectively, and the amount included in Long-term debt due within one year on the ~~Condensed~~ Balance Sheet for this financing obligation ~~is $22.9~~was $23.4 million and $22.4 million, respectively.

Leidy South Project

During the first ~~three~~six months of 2022, we received an additional ~~$2.6~~$3.9 million of funding from a co-owner for its proportionate share of construction costs related to its undivided joint ownership interest in certain parts of the project. This additional funding is reflected in Long-Term Debt on the ~~Condensed~~ Balance Sheet. At ~~March 31,~~June 30, 2022 and December 31, 2021, the amount included in Long-Term Debt on the ~~Condensed~~ Balance Sheet for this financing obligation ~~is $73.9~~was $75.0 million and $71.5 million, respectively, and the amount included in Long-term debt due within one year on the ~~Condensed~~ Balance Sheet for this financing obligation iswas $0.7 million and $0.7 million, respectively.

Note 5 – ARO Trust

We are entitled to collect in rates the amounts necessary to fund our asset retirement obligations (ARO). We deposit monthly, into an external trust account (ARO Trust), the revenues specifically designated for ARO. The ARO Trust carries a moderate risk portfolio. The Money Market Funds held in our ARO Trust are considered investments. ~~We measure the~~The financial instruments held in our ARO Trust are measured at fair ~~value.~~value and reported in Other Assets - Other on the Balance Sheet. However, in accordance with ASC Topic 980, Regulated Operations, both realized and unrealized gains and losses of the ARO Trust are ultimately recorded as regulatory assets or liabilities.

Pursuant to the approved stipulation and agreement in Docket No. RP18-1126 the annual funding obligation effective March 31, 2020 is approximately $16.0 million, with deposits made monthly.

Investments within the ARO Trust were as follows (in millions):


		March 31, 2022				December 31, 2021					June 30, 2022				December 31, 2021
		Amortized Cost Basis		Fair Value		Amortized Cost Basis		Fair Value			Amortized Cost Basis		Fair Value		Amortized Cost Basis		Fair Value
Money Market Funds	Money Market Funds	$	9.7	$	9.7	$	5.9	$	5.9	Money Market Funds	$	13.9	$	13.9	$	5.9	$	5.9
U.S. Equity Funds	U.S. Equity Funds	52.6		114.4		52.7		121.4		U.S. Equity Funds	52.6		94.7		52.7		121.4
International Equity Funds	International Equity Funds	31.7		40.5		31.7		43.2		International Equity Funds	31.7		34.9		31.7		43.2
Municipal Bond Funds	Municipal Bond Funds	87.7		85.0		87.7		90.0		Municipal Bond Funds	87.7		82.5		87.7		90.0
Total	Total	$	181.7	$	249.6	$	178.0	$	260.5	Total	$	185.9	$	226.0	$	178.0	$	260.5


Notes (Continued)			Table of Contents

Note 6 – Fair Value Measurements

The following table presents, by level within the fair value hierarchy, certain of our significant financial assets and liabilities. The carrying values of short-term financial assets that have variable interest rates (advances to affiliate), accounts receivable and accounts payable approximate fair value because of the short-term nature of these instruments. Therefore, these assets and liabilities are not presented in the following table.


						Fair Value Measurements Using											Fair Value Measurements Using
		Carrying Amount		Fair Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Carrying Amount		Fair Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(Millions)											(Millions)
Assets (liabilities) at March 31, 2022:
Assets (liabilities) at June 30, 2022:												Assets (liabilities) at June 30, 2022:
Measured on a recurring basis:	Measured on a recurring basis:											Measured on a recurring basis:
ARO Trust investments	ARO Trust investments	$	249.6	$	249.6	$	249.6	$	—	$	—	ARO Trust investments	$	226.0	$	226.0	$	226.0	$	—	$	—
Additional disclosures:	Additional disclosures:											Additional disclosures:
Long-term debt, including current portion	Long-term debt, including current portion	(5,292.0)		(6,206.2)		—		(6,206.2)		—		Long-term debt, including current portion	(5,288.8)		(5,544.4)		—		(5,544.4)		—

Assets (liabilities) at December 31, 2021:	Assets (liabilities) at December 31, 2021:											Assets (liabilities) at December 31, 2021:
Measured on a recurring basis:	Measured on a recurring basis:											Measured on a recurring basis:
ARO Trust investments	ARO Trust investments	$	260.5	$	260.5	$	260.5	$	—	$	—	ARO Trust investments	$	260.5	$	260.5	$	260.5	$	—	$	—
Additional disclosures:	Additional disclosures:											Additional disclosures:
Long-term debt, including current portion	Long-term debt, including current portion	(5,294.6)		(6,849.8)		—		(6,849.8)		—		Long-term debt, including current portion	(5,294.6)		(6,849.8)		—		(6,849.8)		—

Fair Value Methods

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:

ARO Trust investments: We deposit a portion of our collected rates, pursuant to the terms of the Docket No. RP18-1126 rate case settlement, into the ARO Trust, which is specifically designated to fund future AROs. The ARO Trust invests in a portfolio of actively traded mutual funds that are measured at fair value on a recurring basis based on quoted prices in an active market and are reported in Other ~~Assets-Other~~Assets - Other on the ~~Condensed~~ Balance Sheet. However, both realized and unrealized gains and losses are ultimately recorded as regulatory assets or liabilities. See Note 5 – ARO Trust for more information.

Long-term debt, including current portion: The disclosed fair value of our long-term debt is determined primarily 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 fair value of the financing obligations associated with our Dalton, Atlantic Sunrise and Leidy South projects, which are included within long-term debt, were determined using an income approach (see Note 4 – Debt and Financing Arrangements).

Note 7 – 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,~~June 30, 2022 and December 31, 2021, our advances to Williams totaled approximately ~~$1,941.7 million~~$2.0 billion and ~~$1,669.4 million,~~$1.7 billion, respectively. These advances are represented by demand notes and are classified as Receivables - Advances to affiliate on the ~~Condensed~~ Balance Sheet. Advances are stated at the historical carrying amounts.


Notes (Continued)			Table of Contents

~~historical carrying amounts.~~ Interest expense and income are recognized when earned and the collectability is reasonably assured. 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 ~~0.12~~1.21 percent at ~~March 31,~~June 30, 2022. The interest income from these advances was $3.3 million and $3.5 million for the three and six months ended June 30, 2022, respectively, and minimal for ~~each of~~ the three and six months ended ~~March 31, 2022 and~~June 30, 2021. Such interest income is included in Other (Income) and Other Expenses ~~– Miscellaneous other expense, net~~- Interest income on the ~~Condensed~~ Statement of Net Income.

Included in Operating Revenues on the ~~Condensed~~ Statement of Net Income are revenues received from affiliates of ~~$21.1~~$22.6 million and ~~$2.6~~$43.7 million for the three and six months ended ~~March 31,~~June 30, 2022, respectively, and $2.1 million and $4.7 million for the three and six months ended June 30, 2021, respectively. The rates charged to provide sales and services to affiliates are the same as those that are charged to similarly-situated nonaffiliated customers.

Included in Cost of natural gas sales on the ~~Condensed~~ Statement of Net Income are costs of gas purchased from affiliates of ~~$5.4~~$1.8 million and ~~$3.4~~$7.2 million for the three and six months ended ~~March 31,~~June 30, 2022, respectively, and$0.7 million and $4.1 million for the three and six months ended June 30, 2021, respectively. All gas purchases are made at market or contract prices.

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 have recorded approximately ~~$79.6~~$87.4 million and ~~$78.8~~$167.0 million for the three and six months ended ~~March 31,~~June 30, 2022, respectively, and $75.7 million and $154.5 million for the three and six months ended June 30, 2021, respectively, for these service expenses, which are primarily included in Operation and maintenance and Administrative and general expenses on the ~~Condensed~~ Statement of Net Income.

We provide services to certain of our affiliates. We recorded reductions in operating expenses for services provided to and reimbursed by our affiliates of ~~$1.6~~$2.1 million and ~~$1.7~~$3.7 million for the three and six months ended ~~March 31,~~June 30, 2022, respectively, and $1.8 million and $3.5 million for the three and six months ended June 30, 2021, respectively.

~~We declared and paid cash distributions to our parent totaling $57.5 million during the three months ended March 31, 2022.~~ During ~~April~~July 2022, we declared and paid ~~an additional~~a cash distribution of ~~$250.0~~$280.0 million to our parent. Our parent made contributions to us totaling $128.0 million and $60.0 million during the three months ended March 31, 2022 and 2021, respectively, to fund a portion of our expenditures for additions to property, plant, and equipment.


			Table of Contents

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 Financial Statements, Notes and Management’s Discussion and Analysis contained in Items 7 and 8 of our 2021 Annual Report on Form 10-K and with the ~~Condensed~~ Financial Statements and Notes contained in this Form 10-Q.

Results of Operations

This analysis discusses financial results of our operations for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021. Variances due to the 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.

We have cash out sales, which settle gas imbalances with shippers. In the course of providing transportation services to customers, we may receive different quantities of gas from shippers than the quantities delivered on behalf of those shippers. Additionally, we transport gas on various pipeline systems, which may deliver different quantities of gas on our behalf than the quantities of gas received from us. These transactions result in gas transportation and exchange imbalance receivables and payables. Our tariff includes a method whereby the majority of transportation imbalances are settled on a monthly basis through cash out sales or purchases. The cash out sales have no impact on our operating income.

During the first ~~three~~six months of 2022, we recognized Net Income of $~~288.4~~554.0 million compared to ~~$270.4~~$531.2 million recognized during the first ~~three~~six months of 2021. The significant components of this year-over-year increase of ~~$18.0~~$22.8 million ~~(6.6~~(4.3 percent) are discussed further below.

Natural gas sales revenues increased $28.8 million due to higher cash-out volumes and pricing.

Natural gas transportation revenues increased ~~$39.0~~$81.8 million ~~(6.7~~(7.1 percent), which was primarily attributable to:

•$~~25.6~~51.4 million from our Leidy South project from additional capacity placed into service during the ~~fourth quarter~~second half of 2021;

•$~~4.9~~13.5 million higher electric power costs, which are recovered from our customers through transportation rates and are offset in Operating Costs and Expenses resulting in no net impact on our results of operations;

•$~~3.8~~9.2 million from a combination of higher short-term firm transportation and overall demand;

•$~~2.2~~4.1 million higher commodity revenues; and

•$~~2.2~~3.6 million higher revenues related to a cash out surcharge (offset in Operating Costs and Expenses resulting in no net impact on our results of operations).

Natural gas storage revenuesincreased $9.5 million (11.3 percent) primarily due to an increase in rates that became effective during the second quarter of 2022.

Operating Costs and Expenses, excluding the Cost of natural gas sales, which directly offsets Natural gas sales in Operating Revenues, increased ~~$21.0~~$68.5 million ~~(7.4~~(12.2 percent). This increase was primarily attributable to:

•$~~15.2~~48.4 million increase in Operation and maintenance costs primarily resulting from (i) increased transportation costs of ~~$11.4~~$20.0 million associated with Leidy South, ~~and~~ (ii) higher electric power costs of ~~$4.9~~$13.5 million (electric power costs are recovered from customers through transportation rates and are offset in Operating Revenues resulting in no net impact on our results of operations), ~~partially offset by other immaterial variances;~~

•~~$14.8~~(iii) higher storage costs of $8.4 million ~~increase~~(offset in ~~Depreciation~~Operating Revenues resulting in no net impact on our results of operations) and ~~amortization~~ ~~primarily as a result~~(iv) higher employee-related labor and benefit costs of ~~an increase in ARO related depreciation, and to a lesser extent, additional assets placed into service;~~

•~~$2.6 million increase in~~ ~~Taxes — other than income taxes~~ ~~primarily due to an increase in estimated property taxes;~~$5.9 million;


Management’s Discussion and Analysis (Continued)			Table of Contents

•$11.5 million increase in Administrative and general expenses resulting mostly from an unfavorable change in allocated corporate expenses and employee-related labor and benefit costs;

•$27.7 million increase in Depreciation and amortization primarily as a result of an increase in ARO-related depreciation, and to a lesser extent, additional assets placed into service; and

•$3.9 million increase in Taxes — other than income taxes primarily due to an increase in estimated property taxes as a result of valuation increases;

•Partially offset by a ~~$12.3~~$22.9 million favorable change in Other (income) expense, net driven by the deferral of ~~$12.1~~$21.5 million of ~~ARO related~~ARO-related depreciation (offset in Depreciation and amortization resulting in no net impact on our results of operations), partially offset by the unfavorable change of ~~$2.2~~$3.6 million related to a cash out surcharge (offset in Operating Revenues resulting in no net impact on our results of operations).

Other (income) and other expenses had an unfavorable change of ~~$2.2~~$1.1 million ~~(2.9 percent)~~ driven by an increase of ~~$2.3~~$4.2 million in interest expense primarily due to interest incurred on our financing obligation associated with the Leidy South ~~project.~~project, partially offset by an increase of $3.5 million in affiliated interest income on our advances to Williams due to rising interest rates.

Pipeline Expansion Projects

Regional Energy Access

The Regional Energy Access Expansion involves an expansion of our existing natural gas transmission system to provide incremental firm transportation capacity from receipt points in northeastern Pennsylvania to multiple delivery points in Pennsylvania, New Jersey, and Maryland. We filed our certificate application for the project with the FERC on March 26, 2021. We plan to place the project into service as early as the fourth quarter of 2024, assuming timely receipt of all necessary regulatory approvals. The project is expected to increase capacity by 829 Mdth/d.

Southside Reliability Enhancement

The Southside Reliability Enhancement Project is an incremental expansion of our existing natural gas transmission system to provide firm transportation capacity from receipt points in Virginia and North Carolina to delivery points in North Carolina. The expansion project will add a total of approximately 423 Mdth/d of capacity. We plan to place the project into service as early as the 2024/2025 winter heating season assuming timely receipt of all necessary regulatory approvals. We filed our certificate application for the project with the FERC on May 23, 2022.


			Table of Contents

Item 4. Controls and Procedures

Disclosure 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, 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~~second quarter of 2022 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 I, Item 1. Financial Statements of this Form 10-Q, which information is incorporated by reference into this item.


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Item 1A. Risk Factors

Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 28, 2022, as supplemented by disclosures in Part II, Item 1A. Risk Factors in our Quarterly Report on Form 10-Q, as filed with the SEC on May 2, 2022, 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 or modified by the following risk factors.~~

~~Difficult conditions in the global financial markets and the economy in general could negatively affect our business and results of operations.~~

Our business may be negatively impacted by adverse economic conditions or future disruptions in the global financial markets. Included among these potential negative impacts are industrial or economic contraction (including as a result of the COVID-19 pandemic) leading to reduced energy demand and lower prices for our products and services and increased difficulty in collecting amounts owed to us by our customers. The ongoing Russian invasion of Ukraine and the actions undertaken by western nations in response to Russia’s actions has had, and may continue to have, adverse impacts on global financial markets. We, along with Williams and Northwest Pipeline LLC, are party to a credit agreement with aggregate commitments available of $3.75 billion, with up to an additional $500 million increase in aggregate commitments available under certain circumstances. We and Northwest Pipeline LLC are each subject to a $500 million borrowing sublimit. As of March 31, 2022, we had a borrowing capacity of $500 million under such credit facility, but our ability to borrow under that facility could be impaired if one or more of our lenders fails to honor its contractual obligation to lend to us. If financing is not available when needed, or is available only on unfavorable terms, we may be unable to implement our business plans or otherwise take advantage of business opportunities or respond to competitive pressures. In addition, financial markets have periodically been affected by concerns over U.S. fiscal and monetary policies. These concerns, as well as actions taken by the U.S. federal government in response to these concerns, could significantly and adversely impact the global and U.S. economies and financial markets, which could negatively impact us in the manner described above.

~~Our business could be negatively impacted by acts of terrorism and related disruptions.~~

Given the volatile nature of the commodities we transport and store, our assets and the assets of our customers and others in our industry may be targets of terrorist activities. Uncertainty surrounding the Russian invasion of Ukraine, or other sustained military campaigns, may affect our operations in unpredictable ways, including the possibility that infrastructure facilities could be direct targets of, or indirect casualties of, an act of terrorism. A terrorist attack could create significant price volatility, disrupt our business, limit our access to capital markets, or cause significant harm to our operations, such as full or partial disruption to our ability to transport natural gas. Acts of terrorism, as well as events occurring in response to or in connection with acts of terrorism, could cause environmental repercussions that could result in a significant decrease in revenues or significant reconstruction or remediation costs, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

A breach of our information technology infrastructure, including a breach caused by a cybersecurity attack on us or third parties with whom we are interconnected, may interfere with the safe operation of our assets, result in the disclosure of personal or proprietary information, and harm our reputation.

We rely on our information technology infrastructure to process, transmit, and store electronic information, including information we use to safely operate our assets. In addition to the oversight of our business provided by our Management Committee, the Williams’ Board of Directors has oversight responsibility with regard to enterprise-wide assessment of the major risks inherent in its businesses, including cybersecurity risks. Accordingly, the Williams’ Board of Directors reviews management’s efforts to address and mitigate such risks, including the establishment and implementation of policies to address cybersecurity threats. We have invested, and expect to continue to invest, significant time, manpower, and capital in our information technology infrastructure. However, the age, operating systems, or condition of our current information technology infrastructure and software assets and our ability to maintain and upgrade such assets could affect our ability to resist cybersecurity threats. While we believe that we maintain appropriate information security policies, practices, and protocols, we regularly facechanged.


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cybersecurity and other security threats to our information technology infrastructure, which could include threats to our operational industrial control systems and safety systems that operate our pipelines, plants, and assets. We face unlawful attempts to gain access to our information technology infrastructure, including coordinated attacks from hackers, whether state-sponsored groups, “hacktivists”, or private individuals. We face the threat of theft and misuse of sensitive data and information, including customer and employee information. We also face attempts to gain access to information related to our assets through attempts to obtain unauthorized access by targeting acts of deception against individuals with legitimate access to physical locations or information. We also are subject to cybersecurity risks arising from the fact that our business operations are interconnected with third parties, including third-party pipelines, other facilities, and our contractors and vendors. In addition, the breach of certain business systems could affect our ability to correctly record, process, and report financial information. Breaches in our information technology infrastructure or physical facilities, or other disruptions, including those arising from theft, vandalism, fraud, or unethical conduct, which may increase as a result of the Russian invasion of Ukraine, could result in damage to or destruction of our assets, unnecessary waste, safety incidents, damage to the environment, reputational damage, potential liability, the loss of contracts, the imposition of significant costs associated with remediation and litigation, heightened regulatory scrutiny, increased insurance costs, and have a material adverse effect on our operations, financial condition, results of operations, and cash flows.


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Item 6. Exhibits

The following instruments are included as exhibits to this report.


Exhibit Number						Description

2						Certificate of Conversion dated December 22, 2008 and effective December 31, 2008 (filed on February 24, 2011 as Exhibit 2.1 to our annual report on Form 10-K (File No. 001-07584) and incorporated herein by reference).

3.1						Certificate of Formation dated December 22, 2008 and effective December 31, 2008 (filed on February 24, 2011 as Exhibit 3.1 to our annual report on Form 10-K (File No. 001-07584) and incorporated herein by reference).

3.2						Amended and Restated Operating Agreement of Transcontinental Gas Pipe Line Company, LLC dated February 17, 2010 (filed on October 28, 2010 as Exhibit 3.2 to our quarterly report on Form 10-Q (File No. 001-07584) and incorporated herein by reference).

31.1*						Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*						Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32**						Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*						XBRL Instance Document. 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 Extension 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.

2019


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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

TRANSCONTINENTAL GAS PIPE LINE COMPANY, LLC
(Registrant)

Dated:

~~May 2,~~August 1, 2022

By:

/s/ Billeigh W. Mark

Billeigh W. Mark

Controller

(Principal Accounting Officer)