UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended ~~June 30, 2015~~March 31, 2016

ORor



¨	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~~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, Utah		84108
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (801) 583-8800

NO CHANGE

(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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.

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NORTHWEST PIPELINE LLC

FORM 10-Q

INDEX



	Page
PART I. FINANCIAL INFORMATION:

Item 1. Financial Statements -

Statement of Comprehensive Income — Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2016 and 2015 ~~and 2014~~	1

Balance Sheet — ~~June 30, 2015~~March 31, 2016 and December 31, ~~2014~~2015	2

Statement of Cash Flows — ~~Six~~Three Months Ended ~~June 30,~~March 31, 2016 and 2015 ~~and 2014~~	4

Notes to Financial Statements	5

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	98

Item 4. Controls and Procedures	109

PART II. OTHER INFORMATION:

Item 1. Legal Proceedings	1110

Item 6. Exhibits	1110

Forward-Looking Statements

~~Certain matters contained in this report include~~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.~~amended (Exchange Act). These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions, and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995.

All statements, other than statements of historical facts, included in this report that address activities, events, or developments that we expect, believe, or anticipate will exist or may occur in the future are forward-looking statements. Forward-looking statements can be identified by various forms of words or phrases such as “anticipates,” “believes,” “seeks,” “could,” “may,” “should,” “continues,” “estimates,” “expects,” “assumes,” “forecasts,” “intends,” “might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,” “will,” “guidance,” “outlook,” “in service date,” or other similar expressions. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to management and include, among others, statements regarding:

The status, expected timing and expected outcome of the proposed ETC Merger;

Events which may occur subsequent to the proposed ETC Merger including events which directly impact our business;

Amounts and nature of future capital expenditures;

Expansion and growth of our business and operations;

Financial condition and liquidity;

Business strategy;

Cash flow from operations or results of operations;

Rate case filings;

Natural gas prices, supply, and demand; and

Demand for our services.

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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:

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

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

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

Availability of supplies, market demand, and volatility of prices;

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

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

Whether we are able to successfully identify, evaluate, and execute investment opportunities;

Development of alternative energy sources;

The impact of operational and development hazards and unforeseen interruptions;

Costs of, changes in, or the results of laws, government regulations (including safety and environmental regulations), environmental liabilities, litigation, and rate proceedings;

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

Changes in maintenance and construction costs;

Changes in the current geopolitical situation;

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

Risks related to financing, including restrictions stemming from our debt agreements, future changes in our credit ratings, and the availability and cost of capital;

Risks associated with weather and natural ~~phenomenon,~~phenomena, including climate conditions;

Acts of terrorism, including cybersecurity threats and related disruptions; and

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

Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, we caution investors not to unduly rely on our forward-looking statements. We disclaim any obligations to and do not intend to update the above list or to announce publicly any revisions to any of the forward-looking statements to reflect future events or developments.

In addition to causing our actual results to differ, the factors listed above and referred to below may cause our intentions to change from those statements of intention set forth in this report. Such changes in our intentions may also cause our results to differ. We may change our intentions, at any time and without notice, based upon changes in such factors, our assumptions, or otherwise.

Because forward-looking statements involve risks and uncertainties, we caution that there are important factors, in addition to those listed above, that may cause actual results to differ materially from those contained in the forward-looking statements. For a detailed discussion of those factors, see Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

NORTHWEST PIPELINE LLC

STATEMENT OF COMPREHENSIVE INCOME

(Thousands of Dollars)

(Unaudited)


	Three months ended June 30,						Six months ended June 30,						Three months ended March 31,
	2015			2014			2015			2014			2016			2015
OPERATING REVENUES	$	115,946		$	114,644		$	235,210		$	233,729		$	120,448		$	119,264
OPERATING EXPENSES:
General and administrative	14,276			15,842			29,199			31,444			13,827			14,923
Operation and maintenance	18,168			20,525			35,317			37,051			17,252			17,149
Depreciation	25,078			24,784			50,159			49,398			25,315			25,081
Regulatory debits	586			381			1,184			762			849			598
Taxes, other than income taxes	4,551			4,209			8,912			9,146			4,352			4,361
Total operating expenses	62,659			65,741			124,771			127,801			61,595			62,112
OPERATING INCOME	53,287			48,903			110,439			105,928			58,853			57,152
OTHER (INCOME) AND OTHER EXPENSES:
Interest expense	11,511			11,530			23,019			23,060			11,477			11,508
Allowance for equity and borrowed funds used during construction	(332		)	(173		)	(471		)	(248		)	(383		)	(139		)
Miscellaneous other (income) expenses, net	(1		)	(110		)	(626		)	(23		)	638			(625		)
Total other (income) and other expenses	11,178			11,247			21,922			22,789			11,732			10,744
NET INCOME	42,109			37,656			88,517			83,139			47,121			46,408
CASH FLOW HEDGES:
Amortization of cash flow hedges into Interest expense	(16		)	(16		)	(31		)	(31		)	(15		)	(15		)
COMPREHENSIVE INCOME	$	42,093		$	37,640		$	88,486		$	83,108		$	47,106		$	46,393

See accompanying notes.

~~Table of Contents~~

NORTHWEST PIPELINE LLC

BALANCE SHEET

(Thousands of Dollars)

(Unaudited)


	June 30, 2015		December 31, 2014		March 31, 2016		December 31, 2015
ASSETS
CURRENT ASSETS:
Cash	$	189	$	154	$	128	$	169
Receivables:
Trade	38,809		42,759		41,317		42,669
Affiliated companies	1,510		2,039		1,702		1,441
Advances to affiliate	161,147		135,054		198,021		171,867
Other	1,345		1,249		9,441		14,051
Materials and supplies	10,141		10,066		10,209		10,183
Exchange gas due from others	2,584		4,184		1,481		3,733
Exchange gas offset					—		201
Prepayments and other	7,633		4,881		4,669		6,164
Total current assets	223,358		200,386		266,968		250,478
PROPERTY, PLANT AND EQUIPMENT, at cost	3,292,073		3,269,617		3,315,570		3,306,205
Less-Accumulated depreciation	1,332,545		1,288,530		1,392,203		1,367,632
Total property, plant and equipment, net	1,959,528		1,981,087		1,923,367		1,938,573
OTHER ASSETS:
Deferred charges	3,940		4,700		1,947		2,110
Regulatory assets	46,298		49,923		39,047		40,853
Total other assets	50,238		54,623		40,994		42,963
Total assets	$	2,233,124	$	2,236,096	$	2,231,329	$	2,232,014

See accompanying notes.

~~Table of Contents~~

NORTHWEST PIPELINE LLC

BALANCE SHEET

(Thousands of Dollars)

(Unaudited)


	June 30, 2015		December 31, 2014		March 31, 2016		December 31, 2015
LIABILITIES AND OWNER’S EQUITY
CURRENT LIABILITIES:
Payables:
Trade	$	12,840	$	12,709	$	11,164	$	14,363
Affiliated companies	8,595		13,143		10,651		11,959
Accrued liabilities:
Taxes, other than income taxes	12,420		11,246		14,458		11,033
Interest	4,045		4,045		15,155		4,045
Exchange gas due to others	2,343		6,406		938		2,252
Exchange gas offset	869		3,941		635		—
Customer advances	2,803		2,363		3,529		5,573
Other	2,203		1,799		3,071		3,417
Long-term debt due within one year	174,947		—		174,926		174,837
Total current liabilities	221,065		55,652		234,527		227,479
LONG-TERM DEBT	519,572		694,420		518,727		518,583
OTHER NONCURRENT LIABILITIES:
Asset retirement obligations	98,051		94,678		83,730		82,454
Regulatory liabilities	25,088		23,375		27,737		26,802
Other	8,908		8,017		5,914		6,108
Total other noncurrent liabilities	132,047		126,070		117,381		115,364
CONTINGENT LIABILITIES AND COMMITMENTS (Note 2)
OWNER’S EQUITY:
Owner’s capital	1,073,892		1,073,892		1,073,892		1,073,892
Retained earnings	286,489		285,972		286,789		296,668
Accumulated other comprehensive income	59		90		13		28
Total owner’s equity	1,360,440		1,359,954		1,360,694		1,370,588
Total liabilities and owner’s equity	$	2,233,124	$	2,236,096	$	2,231,329	$	2,232,014

See accompanying notes.

~~Table of Contents~~

NORTHWEST PIPELINE LLC

STATEMENT OF CASH FLOWS

(Thousands of Dollars)

(Unaudited)


	Six months ended June 30,						Three months ended March 31,
	2015			2014			2016			2015
OPERATING ACTIVITIES:
Net income	$	88,517		$	83,139		$	47,121		$	46,408
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	50,159			49,398			25,315			25,081
Regulatory debits	1,184			762			849			598
Gain on sale of property, plant and equipment	—			(70		)
Amortization of deferred charges and credits	685			704			(165		)	336
Allowance for equity funds used during construction	(320		)	(169		)	(262		)	(95		)
Changes in current assets and liabilities:
Trade and other accounts receivable	3,854			2,775			1,061			1,975
Affiliated receivables	529			37,737			(261		)	662
Exchange gas due from others	1,600			(1,043		)	771			1,786
Materials and supplies	(75		)	16			(26		)	(60		)
Other current assets	(2,752		)	(218		)	1,495			(201		)
Trade accounts payable	2,580			(4,062		)	(2,062		)	(1,693		)
Affiliated payables	(4,548		)	(622		)	(1,308		)	(2,937		)
Exchange gas due to others	(1,586		)	1,424			(771		)	(1,772		)
Other accrued liabilities	1,850			(1,566		)	12,285			14,269
Changes in noncurrent assets and liabilities:
Deferred charges	(2,076		)	(1,885		)	(1,341		)	(495		)
Noncurrent liabilities	6,134			4,847			2,650			2,883
Net cash provided by operating activities	145,735			171,167			85,351			86,745
FINANCING ACTIVITIES:
Cash distributions to parent	(88,000		)	(104,000		)	(57,000		)	(58,000		)
Other	(162		)	(656		)	—			(1,097		)
Net cash used in financing activities	(88,162		)	(104,656		)	(57,000		)	(59,097		)
INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures, net of equity AFUDC*	(34,353		)	(20,582		)	(12,327		)	(10,360		)
Contributions and advances for construction costs	1,137			826			379			751
Disposal of property, plant and equipment, net	1,771			2,364			(66		)	(548		)
Advances to affiliates, net	(26,093		)	(49,089		)	(26,154		)	(17,066		)
Proceeds from insurance							9,776			—
Net cash used in investing activities	(57,538		)	(66,481		)	(28,392		)	(27,223		)
NET INCREASE IN CASH	35			30
NET INCREASE (DECREASE) IN CASH							(41		)	425
CASH AT BEGINNING OF PERIOD	154			133			169			154
CASH AT END OF PERIOD	$	189		$	163		$	128		$	579
____________________________________
* Increases to property, plant and equipment	$	(31,552	)	$	(20,848	)	$	(5,759	)	$	(11,045	)
Changes in related accounts payable and accrued liabilities	(2,801		)	266
Changes in related accounts receivable, accounts payable, and accrued liabilities							(6,568		)	685
Capital expenditures, net of equity AFUDC	$	(34,353	)	$	(20,582	)	$	(12,327	)	$	(10,360	)

See accompanying notes.

~~Table of Contents~~

NORTHWEST PIPELINE LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

Northwest Pipeline LLC (Northwest) is indirectly owned by Williams Partners L.P. (WPZ), a publicly traded Delaware limited partnership, which is consolidated by The Williams Companies, Inc. (Williams). On February 2, 2015, WPZ was merged into Access Midstream Partners, L.P. (ACMP), another publicly traded limited partnership consolidated by Williams. ACMP was the surviving partnership and was subsequently renamed ~~Williams Partners L.P.~~WPZ. At ~~June 30, 2015~~March 31, 2016, Williams holds an approximate 60 percent interest in WPZ, comprised of an approximate 58 percent limited partner interest and all of ~~WPZ’s~~the 2 percent general partner interest.

On September 28, 2015, Williams publicly announced in a press release that it had entered into an Agreement and Plan of Merger (Merger Agreement) with Energy Transfer Equity, L.P. (Energy Transfer) and certain of its affiliates. The Merger Agreement provides that, subject to the satisfaction of customary closing conditions, Williams will be merged with and into the newly formed Energy Transfer Corp LP (ETC) (ETC Merger) with ETC surviving the ETC Merger. Energy Transfer formed ETC as a limited partnership that will be treated as a corporation for U.S. federal income tax purposes. Immediately following the completion of the ETC Merger, ETC will contribute to Energy Transfer all of the assets and liabilities of Williams in exchange for the issuance by Energy Transfer to ETC of a number of Energy Transfer Class E common units equal to the number of ETC common shares issued to Williams stockholders in the ETC Merger. WPZ expects to retain its current name and remain a publicly traded limited partnership following the ETC Merger.

In this report, Northwest is at times referred to in the first person as “we,” “us,” or “our.”

General

The accompanying interim financial statements do not include all the notes in our annual financial statements, and therefore, should be read in conjunction with the financial statements and notes thereto in our ~~2014~~2015 Annual Report on Form 10-K. The accompanying unaudited financial statements include all adjustments both normal recurring and others which, in the opinion of our management, are necessary to present fairly our interim financial statements.

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

~~A reclassification within the investing activities of the Statement of Cash Flows, between~~ Capital expenditures, net of equity AFUDC* ~~and~~ ~~Contributions and advances for construction costs~~ ~~of $0.8 million for the~~ ~~six~~ ~~months ended~~ ~~June 30, 2014, has been made to correct the 2014 financial statements to conform to the 2015 presentation.~~

Accounting Standards Issued But Not Yet Adopted

In ~~July 2015,~~February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) ~~2015-11 "Simplifying the Measurement of Inventory"~~2016-02 "Leases (Topic 842)" (ASU ~~2015-11)~~2016-02). ASU ~~2015-11 simplifies~~2016-02 establishes a comprehensive new lease accounting model. The new standard clarifies the ~~guidance~~definition of a lease, requires a dual approach to lease classification similar to current lease classifications, and causes lessees to recognize leases on the subsequent measurement of inventory, excluding inventory measured using last in, first out or the retail inventory method. Under the new standard, in scope inventory should be measured at the lower of cost and net realizable value.balance sheet as a lease liability with a corresponding right-of-use asset. The new standard is effective for interim and annual periods beginning after December 15, ~~2016, with early~~2018. Early adoption is permitted. The new standard requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements. We are evaluating the impact of the new ~~standard.~~

~~In April 2015, the FASB issued ASU 2015-03 "Interest - Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs"~~(ASU 2015-03). ASU 2015-03 simplifies the presentation of debt issuance costs by requiring such costs be presented as a deduction from the corresponding debt liability. The guidance is effective for financial statements issued for reporting periods beginning after December 15, 2015, and interim periods within the reporting periods and requires retrospective presentation. We are evaluating the impact of the new standard.

~~In February 2015, the FASB issued ASU 2015-02 "Amendments to the Consolidation Analysis"~~(ASU 2015-02). ASU 2015-02 alters the models used to determine consolidation conclusions for certain entities, including limited partnerships, and may require additional disclosures. The ASU is effective for financial statements issued for reporting periods beginning after December 15, 2015, and interim periods within the reporting periods with either retrospective or modified retrospective presentation allowed. We are currently evaluating the impact of the new standardstandards on our financial statements.

In May 2014, the FASB issued ASU 2014-09 establishing Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers" (ASC 606). ASC 606 establishes a comprehensive new revenue recognition model designed to depict the transfer of goods or services to a customer in an amount that reflects the consideration the entity expects to be entitled to receive in exchange for those goods or services and requires significantly enhanced revenue disclosures. ~~The~~In April 2016, the FASB issued ASU 2016-10 "Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing" (ASU 2016-10) to clarify aspects of Topic 606 related to identifying performance obligations and licensing implementation guidance. In August 2015, the FASB issued ASU 2015-14 "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date" (ASU 2015-14). Per ASU 2015-14, the standard is effective for interim and annual reporting periods beginning after December 15, ~~2017, and interim periods within the reporting period.~~2017. ASC 606 allows either full retrospective or modified retrospective transition and early adoption is permitted for annual periods beginning after December 15, 2016. We continue to evaluate both the impact of this new standard on our financial statements and the transition method we will utilize for adoption.

~~Table of Contents~~

NORTHWEST PIPELINE LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

2. CONTINGENT LIABILITIES AND COMMITMENTS

Environmental Matters

We are subject to the National Environmental Policy Act and other federal and state legislation regulating the environmental aspects of our business. Except as discussed below, our management believes that we are in substantial compliance with existing environmental requirements. Environmental expenditures are expensed or capitalized depending on their future economic benefit and potential for rate recovery. We believe that, with respect to any expenditures required to meet applicable standards and regulations, the Federal Energy Regulatory Commission (FERC) would grant the requisite rate relief so that substantially all of such expenditures would be permitted to be recovered through rates. ~~As a result, we believe that compliance with applicable environmental requirements is not likely to have a material adverse effect upon our financial position or results of operations.~~

Beginning in the mid-1980s, we evaluated many of our facilities for the presence of toxic and hazardous substances to determine to what extent, if any, remediation might be necessary. We identified polychlorinated biphenyl (PCB) contamination in air compressor systems, soils, and related properties at certain compressor station sites. Similarly, we identified hydrocarbon impacts at these facilities due to the former use of earthen pits, lubricating oil leaks or spills, and excess pipe coating released to the environment. In addition, heavy metals have been identified at these sites due to the former use of mercury containing meters and paint and welding rods containing lead, cadmium, and arsenic. The PCBs were remediated pursuant to a Consent Decree with the U.S. Environmental Protection Agency (EPA) in the late 1980s, and we conducted a voluntary clean-up of the hydrocarbon and mercury impacts in the early 1990s. In 2005, the Washington Department of Ecology required us to re-evaluate our previous clean-ups in Washington. During 2006 to ~~2014, 143~~2015, 129 meter stations were evaluated, of which 8082 required remediation. As of ~~June 30, 2015,~~March 31, 2016, all ~~but one~~of the meter ~~station has~~stations have been remediated. Initial assessments have been completed at all thirteen compressor stations in Washington. Additional assessments are ongoing at three of these compressor stations. Remediation has been completed at nine of the thirteen compressor stations. On the basis of the findings to date, we estimate that environmental assessment and remediation costs will total approximately ~~$7.9~~$4.1 million, measured on an undiscounted basis, and are expected to be incurred through 2019. At ~~June 30, 2015~~March 31, 2016 and December 31, ~~2014,~~2015, we had accrued liabilities totaling approximately ~~$7.9~~$4.1 million and ~~$7.8~~$4.6 million, respectively, for these costs. We are conducting environmental assessments and implementing a variety of remedial measures that may result in increases or decreases in the total estimated costs.

In March 2008, the EPA promulgated a new, lower National Ambient Air Quality Standard (NAAQS) for ground-level ozone. In May 2012, the EPA completed designation of new eight-hour ozone non-attainment areas. Based on the published designations, no Northwest facilities are located within the non-attainment areas. At this time, it is unknown whether future state regulatory actions associated with implementation of the 2008 ozone standard will impact our operations and increase the cost of additions to property, plant and equipment. Until any additional state regulatory actions are proposed, we are unable to estimate the cost of additions that may be required to meet any such new regulation.

In December 2014, the EPA proposed to further reduce the ground-level ozone NAAQS from the March 2008 ~~levels. The EPA is anticipated to finalize any revisions in late~~levels and subsequently finalized a rule on October 1, 2015. ~~Revisions to~~We are monitoring the ~~ozone NAAQS~~rule's implementation as the reduction will ~~result in~~trigger additional federal and state regulatory actions that may impact our operations. As a result, the cost of additions to property, plant, and equipment is expected to increase. We are unable at this time to estimate with any certainty the cost of additions that may be required to meet new regulations.

On January 22, 2010, the EPA set a new one-hour nitrogen dioxide (NO2) NAAQS. The effective date of the new NO2 standard was April 12, 2010. On January 20, 2012, the EPA determined pursuant to available information that no area in the country is violating the 2010 NO2 NAAQS, and thus, designated all areas of the country as “unclassifiable/attainment.” Also, at that time, the EPA noted its plan to deploy an expanded NO2 monitoring network beginning in 2013. However, on October 5, 2012, the EPA proposed a graduated implementation of the monitoring network between January 1, 2014 and January 1, 2017. Once three years of data is collected from the new monitoring network, the EPA will reassess attainment status with the one-hour NO2 NAAQS. Until that time, the EPA or states may require ambient air quality modeling on a case by case basis to demonstrate compliance with the NO2 standard. Because we are unable to predict the outcome of the EPA’s or states’ future assessment using the new monitoring network, we are unable to estimate the cost of additions that may be required to meet this regulation.

Other Matters

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

~~Table of Contents~~

~~NORTHWEST PIPELINE LLC~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Summary

We estimate that for all matters for which we are able to reasonably estimate a range of loss, including those noted above and others that are not individually significant, our aggregate reasonably possible losses beyond amounts accrued for all of our

NORTHWEST PIPELINE LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

contingent liabilities are immaterial to our expected future annual results of operations, liquidity, and financial position. These calculations have been made without consideration of any potential recovery from third-parties. We have disclosed all significant matters for which we are unable to reasonably estimate a range of possible loss.

3. DEBT AND FINANCING ARRANGEMENT

Credit Facility

~~On February 2, 2015, the previous credit facility to which we were a party was terminated in connection with the merger of the former Williams Partners L.P. with and into ACMP. Simultaneously, we,~~We, along with WPZ and Transcontinental Gas Pipe Line Company, LLC (Transco), ~~as co-borrowers, entered into~~are a ~~new~~party to a credit agreement with aggregate commitments available of $3.5 billion, ~~credit facility.~~with up to an additional $500 million increase in aggregate commitments available under certain circumstances. Total letter of credit capacity available to WPZ under ~~the~~this credit facility is $1.125 billion. We ~~may~~are able to borrow up to $500 million under this credit facility to the extent not otherwise utilized by WPZ and Transco. At ~~June 30, 2015~~March 31, 2016, no letters of credit have been issued and no$625 million of loans to WPZ are outstanding under the credit facility.

WPZ participates in a commercial paper program, and WPZ management considers amounts outstanding under this program to be a reduction of available capacity under the credit facility. The program allows a maximum outstanding amount at any time of $3 billion of unsecured commercial paper notes. At ~~June 30, 2015~~March 31, 2016, WPZ had ~~approximately $1.7 billion~~$135 million of ~~outstanding~~ commercial ~~paper.~~paper outstanding.

Long-Term Debt Due Within One Year

The long-term debt due within one year at ~~June 30, 2015~~March 31, 2016 is associated with the $175 million 7% senior unsecured notes that mature on June 15, 2016.

4. FINANCIAL INSTRUMENTS

Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and advances to affiliate—The carrying amounts approximate fair value because of the short-term nature of these instruments.

Long-term debt—The disclosed fair value of our long-term debt, which we consider as a level 2 measurement, is determined by a market approach using broker quoted indicative period-end bond prices. The quoted prices are based on observable transactions in less active markets for our debt or similar instruments. The carrying amount and estimated fair value of our long-term debt, including current maturities, were ~~$694.5~~$693.7 million and ~~$755.3~~$692.3 million, respectively, at ~~June 30, 2015~~March 31, 2016, and ~~$694.4~~$693.4 million and ~~$766.5~~$721.9 million, respectively, at December 31, ~~2014~~2015.

5. TRANSACTIONS WITH AFFILIATES

We are a participant in WPZ’s cash management program. At ~~June 30, 2015~~March 31, 2016 and December 31, ~~2014~~2015, the advances due to us by WPZ totaled approximately $~~161.1~~198.0 million and $~~135.1~~171.9 million, respectively. These advances are represented by demand notes and are classified as Current Assets in the accompanying Balance Sheet. The interest rate on these intercompany demand notes is based upon the daily overnight investment rate paid on WPZ’s excess cash at the end of each month, which was approximately ~~0.01~~0.22 percent at ~~June 30, 2015~~March 31, 2016. The interest income from these advances was minimal during the three ~~and six~~ months ended ~~June 30, 2015~~March 31, 2016 and ~~June 30, 2014~~March 31, 2015. Such interest income is included in Other (Income) and Other Expenses – Miscellaneous other (income) expenses, net on the accompanying Statement of Comprehensive Income.

We have no employees. Services necessary to operate our business are provided to us by Williams and certain affiliates of Williams. We reimburse Williams and its affiliates for all direct and indirect expenses incurred or payments made (including salary,

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~~NORTHWEST PIPELINE LLC~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~(Unaudited)~~

bonus, incentive compensation, and benefits) in connection with these services. Employees of Williams also provide general administrative and management services to us, and we are charged for certain administrative expenses incurred by Williams. These charges are either directly identifiable or allocated to our assets. Direct charges are for goods and services provided by Williams at our request. Allocated charges are based on a three-factor formula, which considers revenues; property, plant, and equipment; and payroll. In management’s estimation, the allocation methodologies used are reasonable and result in a reasonable allocation to us of our costs of doing business incurred by Williams. We were billed ~~$24.9~~$25.0 million and ~~$50.2~~$25.4 million in the three ~~and six~~ months

NORTHWEST PIPELINE LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

ended ~~June 30,~~March 31, 2016 and 2015,~~, respectively, and $25.0 million and $50.4 million in the three and six months ended June 30, 2014,~~ respectively, for these services. Such expenses are primarily included in General and administrative and Operation and maintenance expenses on the accompanying Statement of Comprehensive Income. The amount billed to us for the three months ended March 31, 2016 includes $2.0 million for severance and other related costs associated with a reduction in workforce.

During the ~~six~~three months ended ~~June 30, 2015~~March 31, 2016 and ~~2014,~~2015, we declared and paid cash distributions to our parent of $~~88.0~~57.0 million and ~~$104.0~~$58.0 million, respectively. During ~~July 2015,~~April 2016, we declared and paid cash distributions of ~~$41.0~~$29.0 million to our parent.

We have entered into various other transactions with certain related parties, the amounts of which were not significant. These transactions and the above-described transactions are made on the basis of commercial relationships and prevailing market prices or general industry practices.

~~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 Management’s Discussion and Analysis, Financial Statements, and Notes contained in Items 7 and 8 of our ~~2014~~2015 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 ~~six~~three-month periods ended ~~June 30, 2015~~March 31, 2016 and ~~2014~~2015. Variances due to changes in natural gas prices and transportation volumes have little impact on revenues, because under our rate design methodology, the majority of overall cost of service is recovered through firm capacity reservation charges in our transportation rates.

Our operating revenues increased ~~$1.5~~$1.2 million, or 1 percent, in the first ~~six~~three months of ~~2015~~2016 as compared with the first ~~six~~three months of ~~2014.~~2015. This increase is primarily associated with ~~higher commodity transportation revenues,~~an extra day of business in 2016, due to ~~an increase in off-system deliveries in 2015.~~leap year. Transportation service and gas storage service accounted for 98 percent and 2 percent, respectively, of our operating revenues for the periods ended ~~June 30, 2015~~March 31, 2016 and ~~June 30, 2014~~March 31, 2015.

Operating expenses decreased ~~$3.0~~$0.5 million, or 21 percent, ~~in the first six months of 2015 as compared with the first six months of 2014. Decreases in contractual and other services and supplies of $2.7 million, resulting~~due primarily ~~from decreased pipeline maintenance and repairs, and~~to decreases in charges from affiliates of ~~$1.8~~$2.1 million, ~~were~~partially offset by ~~increases~~$2.0 million in ~~labor~~severance and other related ~~expenses of $1.3 million and depreciation of $0.8 million, resulting from property additions.~~costs associated with a reduction in workforce.

Capital Expenditures

Our capital expenditures were $~~34.4~~12.3 million and $~~20.6~~10.4 million for the ~~six~~three months ended ~~June 30, 2015~~March 31, 2016 and ~~2014~~2015, respectively. Our capital expenditures estimate for ~~2015~~2016 is discussed in our ~~2014~~2015 Annual Report on Form 10-K.

~~Table of Contents~~

Item 4. Controls and Procedures

Our management, including our Senior Vice President—West and our Vice President and Chief Accounting Officer, does not expect that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act) (Disclosure Controls) or our internal control over financial reporting (Internal Controls) will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. We monitor our Disclosure Controls and Internal Controls and make modifications as necessary; our intent in this regard is that the Disclosure Controls and Internal Controls will be modified as systems change and conditions warrant.

Evaluation of Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of our Disclosure Controls was performed as of the end of the period covered by this report. This evaluation was performed under the supervision and with the participation of our management, including our Senior Vice President—West and our Vice President and Chief Accounting Officer. Based upon that evaluation, our Senior Vice President—West and our Vice President and Chief Accounting Officer concluded that these Disclosure Controls are effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There have been no changes during the ~~second~~first quarter of ~~2015~~2016 that have materially affected, or are reasonably likely to materially affect, our Internal Control over Financial Reporting.

~~Table of Contents~~

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The information called for by this item is provided in Note 2. Contingent Liabilities and Commitments, included in the Notes to Financial Statements included under Part 1, Item 1. Financial Statements of this Form 10-Q, which information is incorporated by reference into this item.

Item 6. Exhibits

The following instruments are included as exhibits to this report.



Exhibit		Description

2		Certificate of Conversion of Northwest Pipeline GP (Exhibit 2.1 to our report on Form 8-K, filed July 3, 2013 (File No. 001-07414)) and incorporated herein by reference.

3.1		Certificate of Formation of Northwest Pipeline LLC (Exhibit 2.2 to our report on Form 8-K, filed July 3, 2013 (File No. 001-07414)) and incorporated herein by reference.

3.2		Operating Agreement of Northwest Pipeline LLC (Exhibit 3.1 to our report on Form 8-K, filed July 3, 2013 (File No. 001-07414)) and incorporated herein by reference.

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

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

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

101.INS*		XBRL Instance Document.

101.SCH*		XBRL Taxonomy Extension Schema.

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase.

101.DEF*		XBRL Taxonomy Definition Linkbase.

101.LAB*		XBRL Taxonomy Extension Label Linkbase.

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase.



*	Filed herewith.
**	Furnished herewith.

~~Table of Contents~~

SIGNATURE

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




			NORTHWEST PIPELINE LLC
			Registrant

	By:		/s/ Jeffrey P. Heinrichs
			Jeffrey P. Heinrichs Controller (Duly Authorized Officer and Principal Accounting Officer)

Date: ~~July 30, 2015~~May 5, 2016

Table of Contents

EXHIBIT INDEX



Exhibit		Description

2		Certificate of Conversion of Northwest Pipeline GP (Exhibit 2.1 to our report on Form 8-K, filed July 3, 2013 (File No. 001-07414)) and incorporated herein by reference.

3.1		Certificate of Formation of Northwest Pipeline LLC (Exhibit 2.2 to our report on Form 8-K, filed July 3, 2013 (File No. 001-07414)) and incorporated herein by reference.

3.2		Operating Agreement of Northwest Pipeline LLC (Exhibit 3.1 to our report on Form 8-K, filed July 3, 2013 (File No. 001-07414)) and incorporated herein by reference.

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

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

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

101.INS*		XBRL Instance Document.

101.SCH*		XBRL Taxonomy Extension Schema.

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase.

101.DEF*		XBRL Taxonomy Definition Linkbase.

101.LAB*		XBRL Taxonomy Extension Label Linkbase.

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase.



*	Filed herewith.
**	Furnished herewith.

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