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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 June 30, 20202021
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number: 1-7414
NORTHWEST PIPELINE LLC
(Exact name of registrant as specified in its charter)
Delaware26-1157701
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)
295 Chipeta Way
Salt Lake CityUT84108
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (801(801)  583-8800
NO CHANGE
(Former name, former address, and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨Accelerated filer¨Non-accelerated filerþSmaller reporting company☐Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  þ
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION (H)(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM 10-Q WITH THE REDUCED DISCLOSURE FORMAT.


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NORTHWEST PIPELINE LLC
FORM 10-Q
INDEX
 
Page
Page
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements -
Statement of Net Income — Three and Six Months Ended June 30, 20202021 and 20192020
1
Balance Sheet — June 30, 20202021 and December 31, 20192020
2
Statement of Member's Equity — Three and Six Months Ended June 30, 20202021 and 20192020
4
Statement of Cash Flows — Six Months Ended June 30, 20202021 and 20192020
5
Notes to Financial Statements
6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
10
Item 4. Controls and Procedures
1211
11
Item 1. Legal Proceedings
1211
Item 1A.Risk Factors
1211
Item 6. Exhibits
12
FORWARD-LOOKING STATEMENTS
The reports, filings, and other public announcements of Northwest Pipeline LLC may contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions, and other matters.
All statements, other than statements of historical facts, included in this report that address activities, events, or developments that we expect, believe, or anticipate will exist or may occur in the future are forward-looking statements. Forward-looking statements can be identified by various forms of words such as “anticipates,” “believes,” “seeks,” “could,” “may,” “should,” “continues,” “estimates,” “expects,” “forecasts,” “intends,” “might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,” “will,” “assumes,” “guidance,” “outlook,” “in-service date,” or other similar expressions. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to management and include, among others, statements regarding:
•Our and our affiliates’ future credit ratings;

•Amounts and nature of future capital expenditures;

•Expansion and growth of our business and operations;

•Expected in-service dates for capital projects;

•Financial condition and liquidity;

•Business strategy;

•Cash flow from operations or results of operations;

•Rate case filings;

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•Natural gas prices, supply, and demand;

•Demand for our services; and

•The impact of the novel coronavirus (COVID-19) pandemic.
Forward-looking statements are based on numerous assumptions, uncertainties, and risks that could cause future events or results to be materially different from those stated or implied in this report. Many of the factors that will determine these results are beyond our ability to control or predict. Specific factors that could cause actual results to differ from results contemplated by the forward-looking statements include, among others, the following:

•The impact of operational and developmental hazards and unforeseen interruptions;

•Development and rate of adoption of alternative energy sources;

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

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

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

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

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

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

•The physical and financial risks associated with climate change;

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

•Our ability to successfully expand our facilities and operations;

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

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

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

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

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

•Changes in the current geopolitical situation;

•Changes in U.S. governmental administration and policies;

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

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

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

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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, 2020, as filed with the SEC on February 24, 2020, as supplemented by the disclosure in Part II, Item 1A. Risk Factors in our Quarterly Report on Form 10-Q filed with the SEC on May 4, 2020.2021.




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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.

NORTHWEST PIPELINE LLC
STATEMENT OF NET INCOME
(Thousands of Dollars)
(Unaudited)
 
 Three months ended Six months endedThree months endedSix months ended
 June 30, June 30,June 30,June 30,
 2020 2019 2020 20192021202020212020
OPERATING REVENUES:        OPERATING REVENUES:
Natural gas transportation $106,145
 $105,465
 $218,166
 $215,348
Natural gas transportation$104,051 $106,145 $213,328 $218,166 
Natural gas storage 3,716
 4,883
 7,062
 9,125
Natural gas storage3,867 3,716 7,537 7,062 
Other (10) 15
 (31) (46)Other4 (10)(49)(31)
Total operating revenues 109,851
 110,363
 225,197
 224,427
Total operating revenues107,922 109,851 220,816 225,197 
OPERATING EXPENSES:        OPERATING EXPENSES:
General and administrative 13,096
 14,056
 25,795
 26,776
General and administrative11,460 13,096 23,130 25,795 
Operation and maintenance 19,546
 20,598
 35,045
 36,913
Operation and maintenance19,533 19,546 36,179 35,045 
Depreciation and amortization 27,821
 26,830
 55,881
 53,607
Depreciation and amortization28,200 27,821 56,268 55,881 
Regulatory debits 290
 178
 581
 358
Regulatory debits350 290 698 581 
Taxes, other than income taxes 3,714
 4,450
 7,834
 7,848
Taxes, other than income taxes4,281 3,714 8,497 7,834 
Regulatory charges resulting from tax rate changes 5,879
 5,879
 11,693
 11,693
Regulatory charges resulting from tax rate changes5,879 5,879 11,693 11,693 
Other (income) expenses, net (3) (120) (5) 11
Other (income) expenses, net(15)(3)(46)(5)
Total operating expenses 70,343
 71,871
 136,824
 137,206
Total operating expenses69,688 70,343 136,419 136,824 
        
OPERATING INCOME 39,508
 38,492
 88,373
 87,221
OPERATING INCOME38,234 39,508 84,397 88,373 
        
OTHER (INCOME) AND OTHER EXPENSES:        OTHER (INCOME) AND OTHER EXPENSES:
Interest expense 7,509
 7,290
 14,960
 14,474
Interest expense7,480 7,509 14,841 14,960 
Allowance for equity and borrowed funds used during construction (AFUDC) (322) (750) (620) (1,256)Allowance for equity and borrowed funds used during construction (AFUDC)(374)(322)(639)(620)
Miscellaneous other (income) expenses, net (164) (1,138) (1,256) (2,074)Miscellaneous other (income) expenses, net(184)(164)(345)(1,256)
Total other (income) and other expenses 7,023
 5,402
 13,084
 11,144
Total other (income) and other expenses6,922 7,023 13,857 13,084 
        
NET INCOME $32,485
 $33,090
 $75,289
 $76,077
NET INCOME$31,312 $32,485 $70,540 $75,289 
See accompanying notes.


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NORTHWEST PIPELINE LLC
BALANCE SHEET
(Thousands of Dollars)
(Unaudited)
 
 June 30,
2020		 December 31,
2019		June 30,
2021		December 31,
2020
ASSETS    ASSETS
    
CURRENT ASSETS:    CURRENT ASSETS:
Cash $—
 $—
Cash$0 $0 
Receivables:    Receivables:
Trade 36,004
 40,066
Trade35,226 37,365 
Affiliated companies 43
 109
Affiliated companies81 51 
Advances to affiliate 248,656
 201,265
Advances to affiliate271,899 247,869 
Other 1,171
 1,962
Other2,684 840 
Materials and supplies 9,811
 9,683
Materials and supplies9,785 9,807 
Exchange gas due from others 1,499
 5,534
Exchange gas due from others4,434 4,466 
Prepayments and other 3,740
 3,346
Prepayments and other4,152 4,078 
Total current assets 300,924
 261,965
Total current assets328,261 304,476 
    
PROPERTY, PLANT AND EQUIPMENT, at cost 3,608,380
 3,593,186
PROPERTY, PLANT AND EQUIPMENTPROPERTY, PLANT AND EQUIPMENT3,687,607 3,653,792 
Less-Accumulated depreciation and amortization 1,722,847
 1,673,315
Less-Accumulated depreciation and amortization1,811,905 1,761,229 
Total property, plant and equipment, net 1,885,533
 1,919,871
Total property, plant and equipment, net1,875,702 1,892,563 
    
OTHER ASSETS:    OTHER ASSETS:
Deferred charges 2,115
 1,075
Deferred charges5,897 3,775 
Regulatory assetsRegulatory assets18,980 20,022 
Right-of-use assets 17,401
 18,101
Right-of-use assets10,565 10,692 
Regulatory assets 20,934
 21,935
Total other assets 40,450
 41,111
Total other assets35,442 34,489 
    
Total assets $2,226,907
 $2,222,947
Total assets$2,239,405 $2,231,528 
See accompanying notes.

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

 June 30,
2020		 December 31,
2019		June 30,
2021		December 31,
2020
LIABILITIES AND MEMBER’S EQUITY    LIABILITIES AND MEMBER’S EQUITY
    
CURRENT LIABILITIES:    CURRENT LIABILITIES:
Payables:    Payables:
Trade $13,475
 $15,635
Trade$22,622 $16,157 
Affiliated companies 12,161
 9,172
Affiliated companies7,607 4,110 
Accrued liabilities:    Accrued liabilities:
Taxes, other than income taxes 10,520
 9,913
Taxes, other than income taxes12,252 10,905 
Interest 5,505
 5,505
Interest5,505 5,505 
Exchange gas due to others 1,457
 4,468
Exchange gas due to others5,162 4,557 
Customer advances 6,208
 4,109
Customer advances5,998 539 
Other 4,645
 6,990
Other6,762 6,786 
Total current liabilities 53,971
 55,792
Total current liabilities65,908 48,559 
    
LONG-TERM DEBT 577,526
 577,045
LONG-TERM DEBT578,519 578,018 
    
OTHER NONCURRENT LIABILITIES:    
OTHER NON-CURRENT LIABILITIES:OTHER NON-CURRENT LIABILITIES:
Asset retirement obligations 93,949
 91,251
Asset retirement obligations98,501 95,777 
Regulatory liabilities 339,369
 323,032
Regulatory liabilities371,986 355,725 
Lease liability 16,188
 16,823
Lease liability8,329 8,341 
Other 5,306
 5,695
Other4,227 4,713 
Total other noncurrent liabilities 454,812
 436,801
Total other non-current liabilitiesTotal other non-current liabilities483,043 464,556 
    
CONTINGENT LIABILITIES AND COMMITMENTS (Note 4) 

 

CONTINGENT LIABILITIES AND COMMITMENTS (Note 3)CONTINGENT LIABILITIES AND COMMITMENTS (Note 3)00
    
MEMBER’S EQUITY:    MEMBER’S EQUITY:
Member’s capital 1,073,892
 1,073,892
Member’s capital1,073,892 1,073,892 
Retained earnings 66,706
 79,417
Retained earnings38,043 66,503 
Total member’s equity 1,140,598
 1,153,309
Total member’s equity1,111,935 1,140,395 
    
Total liabilities and member’s equity $2,226,907
 $2,222,947
Total liabilities and member’s equity$2,239,405 $2,231,528 
See accompanying notes.


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NORTHWEST PIPELINE LLC
STATEMENT OF MEMBER’S EQUITY
(Thousands of Dollars)
(Unaudited)
 
Three months ended June 30,
20212020
MEMBER'S CAPITAL:
Balance at beginning and end of period$1,073,892 $1,073,892 
RETAINED EARNINGS:
Balance at beginning of period50,731 77,221 
Net income31,312 32,485 
Cash distributions to parent(44,000)(43,000)
Balance at end of period38,043 66,706 
Total Member’s Equity$1,111,935 $1,140,598 
  Three months ended June 30,
  2020 2019
MEMBER'S CAPITAL:    
Balance at beginning and end of period $1,073,892
 $1,073,892
RETAINED EARNINGS:    
Balance at beginning of period 77,221
 68,737
Net income 32,485
 33,090
Cash distributions to parent (43,000) (25,000)
Balance at end of period 66,706
 76,827
Total Member's Equity $1,140,598
 $1,150,719



 Six months ended June 30,Six months ended June 30,
 2020 201920212020
MEMBER'S CAPITAL:    MEMBER'S CAPITAL:
Balance at beginning and end of period $1,073,892
 $1,073,892
Balance at beginning and end of period$1,073,892 $1,073,892 
RETAINED EARNINGS:    RETAINED EARNINGS:
Balance at beginning of period 79,417
 46,750
Balance at beginning of period66,503 79,417 
Net income 75,289
 76,077
Net income70,540 75,289 
Cash distributions to parent (88,000) (46,000)Cash distributions to parent(99,000)(88,000)
Balance at end of period 66,706
 76,827
Balance at end of period38,043 66,706 
Total Member's Equity $1,140,598
 $1,150,719
Total Member’s EquityTotal Member’s Equity$1,111,935 $1,140,598 

See accompanying notes.


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NORTHWEST PIPELINE LLC
STATEMENT OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
 Six months ended June 30,Six months ended June 30,
 2020 201920212020
Cash flows from operating activities:    Cash flows from operating activities:
Net income $75,289
 $76,077
Net income$70,540 $75,289 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:    Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization 55,881
 53,607
Depreciation and amortization56,268 55,881 
Regulatory debits 581
 358
Regulatory debits698 581 
Regulatory charges resulting from tax rate changes 11,693
 11,693
Regulatory charges resulting from tax rate changes11,693 11,693 
Amortization of deferred charges and credits (1,890) (1,129)Amortization of deferred charges and credits(1,818)(1,890)
Allowance for equity funds used during construction (equity AFUDC) (501) (1,003)Allowance for equity funds used during construction (equity AFUDC)(518)(501)
Changes in current assets and liabilities:    Changes in current assets and liabilities:
Trade and other accounts receivable 6,107
 3,302
Trade and other accounts receivable(1,472)6,107 
Affiliated receivables 66
 —
Affiliated receivables(30)66 
Materials and supplies (128) (25)Materials and supplies22 (128)
Other current assets 3,642
 8,590
Other current assets(41)3,642 
Trade accounts payable (1,925) (1,919)Trade accounts payable1,084 (1,925)
Affiliated payables 2,989
 (16,379)Affiliated payables3,497 2,989 
Other accrued liabilities (8,422) (8,031)Other accrued liabilities3,413 (8,422)
Changes in noncurrent assets and liabilities:    Changes in noncurrent assets and liabilities:
Regulatory liabilities 2,189
 1,559
Regulatory liabilities2,040 2,189 
Other, net 1,421
 931
Other, net244 1,421 
Net cash provided by operating activities 146,992
 127,631
Net cash provided by operating activities145,620 146,992 
    
Cash flows from financing activities:    Cash flows from financing activities:
Payments for debt issuance costs —
 (58)
Cash distributions to parent (88,000) (46,000)Cash distributions to parent(99,000)(88,000)
Net cash used in financing activities (88,000) (46,058)Net cash used in financing activities(99,000)(88,000)
    
Cash flows from investing activities:    Cash flows from investing activities:
Property, plant and equipment:    Property, plant and equipment:
Capital expenditures* (15,892) (31,705)Capital expenditures*(25,247)(15,892)
Contributions and advances for construction costs 4,588
 412
Contributions and advances for construction costs5,179 4,588 
Disposal of property, plant and equipment, net (297) (64)Disposal of property, plant and equipment, net(2,522)(297)
Advances to affiliate, net (47,391) (50,216)Advances to affiliate, net(24,030)(47,391)
Net cash used in investing activities (58,992) (81,573)Net cash used in investing activities(46,620)(58,992)
    
NET INCREASE (DECREASE) IN CASH —
 —
CASH AT BEGINNING OF PERIOD —
 —
CASH AT END OF PERIOD $—
 $—
Net increase (decrease) in cashNet increase (decrease) in cash0 0 
Cash at beginning of periodCash at beginning of period0 0 
Cash at end of periodCash at end of period$0 $0 
____________________________________    ____________________________________
* Increases to property, plant and equipment, exclusive of equity AFUDC $(17,487) $(37,510)* Increases to property, plant and equipment, exclusive of equity AFUDC$(29,885)$(17,487)
Changes in related accounts payable and accrued liabilities 1,595
 5,805
Changes in related accounts payable and accrued liabilities4,638 1,595 
Capital expenditures $(15,892) $(31,705)Capital expenditures$(25,247)$(15,892)
See accompanying notes.
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NORTHWEST PIPELINE LLC
NOTES TO FINANCIAL STATEMENTS
(Unaudited)


1. BASIS OF PRESENTATION
In this report, Northwest Pipeline LLC (Northwest) is at times referred to in the first person as “we,” “us,” or “our.”
Northwest is indirectly owned by The Williams Companies, Inc. (Williams).
General
The accompanying unaudited financial statements have been prepared from our books and records. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted in this Form 10-Q pursuant to Securities and Exchange Commission rules and regulations. The unaudited financial statements include all normal recurring adjustments and others which, in the opinion of our management, are necessary to present fairly our interim financial statements. These unaudited financial statements should be read in conjunction with the financial statements and notes thereto in our 20192020 Annual Report on Form 10‑K.10-K.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the interim financial statements and accompanying notes. Actual results could differ from those estimates.
Income Taxes
We generally are not a taxable entity for federal or state and local income tax purposes. The tax on net income is generally borne by our parent, Williams. Net income for financial statement purposes may differ significantly from taxable income of Williams as a result of differences between the tax basis and financial reporting basis of assets and liabilities.
Accounting Standards Issued and Adopted
In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (ASU 2016-13). ASU 2016-13 changed the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans, and other instruments, entities are required to use a forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. We adopted ASU 2016-13 effective January 1, 2020, which primarily applied to our short-term trade receivables. There was no cumulative effect adjustment to retained earnings upon adoption.
The majority of our trade receivable balances are due within 30 days. We monitor the credit quality of our counterparties through review of collection trends, credit ratings, and other analysis, such as bankruptcy monitoring. Financial assets are evaluated as one pool. Changes in counterparty risk factors could lead to reassessment of the composition of our financial assets as one pool. We calculate our allowance for credit losses incorporating an aging method. In estimating our expected credit losses, we utilized historical loss rates over many years. Our expected credit loss estimate considered both internal and external forward-looking commodity price expectations, as well as counterparty credit ratings, and factors impacting their near-term liquidity.
Past due accounts are generally written off against the allowance for doubtful accounts only after all collection attempts have been exhausted. We do not have a material amount of significantly aged receivables at June 30, 2020.







2. REVENUE RECOGNITION
Revenue by Category
Our revenue disaggregation by major service line includes Natural gas transportation, Natural gas storage, and Other, which are separately presented on the Statement of Net Income.
Contract Assets
The following table presents a reconciliation of our contract assets:
Three months endedSix months ended
June 30,June 30,
2021202020212020
(Thousands)
Balance at beginning of period$4,516 $1,174 $3,395 $554 
Revenue recognized in excess of amounts invoiced1,134 620 2,255 1,240 
Balance at end of period$5,650 $1,794 $5,650 $1,794 
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Contract Liabilities
The following table presents a reconciliation of our contract liabilities:
 
Three months ended June 30, 2020

Six months ended June 30, 2020

 (Thousands)
Balance at beginning of period$5,251
$5,464
Recognized in Revenue(212)(425)
Balance at end of period$5,039
$5,039

Three months endedSix months ended
June 30,June 30,
2021202020212020
(Thousands)
Balance at beginning of period$4,378 $5,251 $4,610 $5,464 
Recognized in Revenue(234)(212)(466)(425)
Balance at end of period$4,144 $5,039 $4,144 $5,039 
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 the periodic review and approval by the Federal Energy Regulatory Commission (FERC), reflect the rates for such services in our current FERC tariffs for the life of the related contracts; however, these rates may change based on future rate cases or settlements approved by the FERC and the amount and timing of these changes is not currently known. This table excludes the variable consideration component for commodity charges. Certain of our contracts contain evergreen provisions for periods beyond the initial term of the contract. The remaining performance obligations, as of June 30, 2020,2021, do not consider potential future performance obligations for which the renewal has not been exercised. The table below also does not include contracts with customers for which the underlying facilities have not received FERC authorization to be placed into service.
The following table presents the amount of the contract liabilities balance expected to be recognized as revenue when performance obligations are satisfied and the transaction price allocated to the remaining performance obligations under certain contracts as of June 30, 2020.2021.
 Contract LiabilitiesRemaining Performance Obligations
 (Thousands)
2020 (remainder)$430
$215,460
2021938
421,614
20221,029
403,146
20231,119
365,540
20241,218
335,415
Thereafter305
2,975,288
Total$5,039
$4,716,463

Contract LiabilitiesRemaining Performance Obligations
(Thousands)
2021 (six months)$473 $211,314 
2022 (one year)1,029 415,849 
2023 (one year)1,120 374,378 
2024 (one year)1,217 338,118 
2025 (one year)305 331,136 
Thereafter 000 2,834,599 
Total$4,144 $4,505,394 
Accounts Receivable
Receivables from contracts with customers are included within Receivables - Trade and Receivables - Affiliated companies and receivables that are not related to contracts with customers are included within the balance of Receivables - Advances to affiliate and Receivables - Other in our Balance Sheet.
3. RATE AND REGULATORY MATTERS
FERC Developments
Notice of Inquiry (Docket No. PL19-4-000) On May 21, 2020, the FERC issued a “Policy Statement on Determining Return on Equity for Natural Gas and Oil Pipelines” (Policy Statement) in Docket No. PL19-4-000 adopting changes to its policies concerning the calculation of a public utility return on equity (ROE). In this Policy Statement, the FERC revised its ROE policy


for natural gas pipelines and oil pipelines to provide that the FERC will determine a pipeline’s ROE by averaging the results of the Discounted Cash Flow model and the Capital Asset Pricing Model, with each weighted equally. The FERC declined to adopt any additional policy changes at this time and will address all other issues concerning the determination of a pipeline’s ROE as they arise in future proceedings.
Our next general rate case must be filed for new rates to become effective no later than January 1, 2023.
4. CONTINGENT LIABILITIES AND COMMITMENTS
Environmental Matters
We are subject to the National Environmental Policy Act and other federal and state legislation regulating the environmental aspects of our business. Except as discussed below, our management believes that we are in substantial compliance with existing environmental requirements. Environmental expenditures are expensed or capitalized depending on their future economic benefit and potential for rate recovery. We believe that, with respect to any expenditures required to meet applicable standards and regulations, the FERC would grant the requisite rate relief so that substantially all of such expenditures would be permitted to be recovered through rates.
Beginning in the mid-1980s, we evaluated many of our facilities for the presence of toxic and hazardous substances to determine to what extent, if any, remediation might be necessary. We identified polychlorinated biphenyl (PCB) contamination
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in air compressor systems, soils, and related properties at certain compressor station sites. Similarly, we identified hydrocarbon impacts at these facilities due to the former use of earthen pits, lubricating oil leaks or spills, and excess pipe coating released to the environment. In addition, heavy metals have been identified at these sites due to the former use of mercury containing meters and paint and welding rods containing lead, cadmium, and arsenic. The PCBs were remediated pursuant to a Consent Decree with the U.S. Environmental Protection Agency (EPA) in the late 1980s, and we conducted a voluntary clean-up of the hydrocarbon and mercury impacts in the early 1990s. In 2005, the Washington Department of Ecology required us to re-evaluate our previous clean-ups in Washington. During 2006 to 2015, 129 meter stations were evaluated, of which 82 required remediation. As of June 30, 2020,2021, all of the meter stations have been remediated. During 2006 to 2018, 14 compressor stations were evaluated, of which 11 required remediation. As of June 30, 2020, 102021, 5 compressor stations have beenare still being remediated. At June 30, 2020,2021, we had accrued liabilities totaling approximately $1.1$1.0 million, $0.1 million of which is recorded in Accrued liabilities - Other and $1.0$0.9 million of which is recorded in Other Noncurrent Liabilities - Other in the accompanying Balance Sheet. At December 31, 2019,2020, we had accrued liabilities totaling approximately $1.2$1.1 million, $0.1 million of which is recorded in Accrued liabilities - Other and $1.1$1.0 million of which is recorded in Other Noncurrent Liabilities - Other in the accompanying Balance Sheet. We are conducting environmental assessments and implementing a variety of remedial measures that may result in increases or decreases in the total estimated costs.
The EPA and various state regulatory agencies routinely promulgatepropose and proposepromulgate new rules, and issue updated guidance to existing rules. These rulemakings include, but are not limited to, rules for reciprocating internal combustion engine and combustion turbine maximum achievable control technology, air quality standards for one-hour nitrogen dioxide emissions,review and volatile organic compound and methane new source performance standards impacting design and operation of storage vessels, pressure valves, and compressors. The EPA previously issued its rule regardingupdates to the National Ambient Air Quality Standards, and rules for ground-level ozone.new and existing source performance standards for volatile organic compounds and methane. We are monitoring the rule’s implementation as it will trigger additional federalcontinuously monitor these regulatory changes and state regulatory actions thathow they may impact our operations. Implementation of thenew or modified regulations is expected tomay result in impacts to our operations and increase the cost of additions to Property, plant, and equipment - net in the Balance Sheet for both new and existing facilities in affected areas. Weareas; however, due to regulatory uncertainty on final rule content and applicability timeframes, we are unable to reasonably estimate the cost of additions that may be required to meet the regulationsthese regulatory impacts at this time due to uncertainty created by various legal challenges to these regulations and the need for further specific regulatory guidance.time.
Other Matters
Various other proceedings are pending against us and are considered incidental to our operations.
Summary
We estimate that for all matters for which we are able to reasonably estimate a range of loss, including those noted above and others that are not individually significant, our aggregate reasonably possible losses beyond amounts accrued for all of our contingent liabilities are immaterial to our expected future annual results of operations, liquidity and financial position. These calculations have been made without consideration of any potential recovery from third-parties. We have disclosed all significant matters for which we are unable to reasonably estimate a range of possible loss.


5.4. DEBT AND FINANCING ARRANGEMENTS
Credit Facility
We, along with Williams and Transcontinental Gas Pipe Line Company, LLC (Transco), are party to a Credit Agreementcredit agreement with aggregate commitments available of $4.5 billion, with up to an additional $500 million increase in aggregate commitments available under certain circumstances. We and Transco are each subject to a $500 million borrowing sublimit. Letter of credit commitments of $1.0 billion are subject to the $500 million borrowing sublimit applicable to us and Transco. At June 30, 2020,2021, 0 letters of credit have been issued and 0 loans were outstanding under the credit facility.
Williams participates in a commercial paper program and WilliamsWilliams’ 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 anytimeany time of $4.0 billion of unsecured commercial paper notes. At June 30, 2020,2021, Williams had 0 outstanding commercial paper.
6.5. FINANCIAL INSTRUMENTS
Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:
Cash and advances to affiliate—Short-term financial assets—The carrying amountsvalues of short-term financial assets (advances to affiliate) that have variable interest rates, accounts receivable and accounts payable approximate fair value because of the short-term nature of these instruments.
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Long-term debt—debt—The disclosed fair value of our long-term debt, which we consider as a level 2 measurement, is determined by a market approach using broker quoted indicative period-end bond prices. The quoted prices are based on observable transactions in less active markets for our debt or similar instruments. The carrying amount and estimated fair value of our long-term debt were $577.5$578.5 million and $646.8$659.5 million, respectively, at June 30, 2020,2021, and $577.0$578.0 million and $637.8$680.6 million, respectively, at December 31, 2019.2020.
7.6. TRANSACTIONS WITH AFFILIATES
We are a participant in Williams’ cash management program, and we make advances to and receive advances from Williams. At June 30, 20202021 and December 31, 2019,2020, our advances to Williams totaled approximately $248.7$271.9 million and $201.3$247.9 million, respectively. These advances are represented by demand notes and are classified as Receivables - Advances to affiliate in the accompanying Balance Sheet. The interest rate on these intercompany demand notes is based upon the daily overnight investment rate paid on Williams’ excess cash at the end of each month, which was 0.050.01 percent at June 30, 2020.2021. The interest income from these advances was minimal for the three and six months ended June 30, 2021, and $0.1 million and $0.6 million for the three and six months ended June 30, 2020, respectively, and $1.2 million and $2.2 million for the three and six months ended June 30, 2019, respectively. Such interest income is included in Other (Income) and Other Expenses – Miscellaneous other (income) expenses, net on the accompanying Statement of Net Income.
Included in Operating Revenues in the accompanying Statement of Net Income are revenues received from affiliates of $0.2 million and $0.6 million for the three and six months ended June 30, 2021, respectively, and $0.2 million and $0.4 million for the three and six months ended June 30, 2020, respectively. The rates charged to provide services to affiliates are the same as those that are charged to similarly-situated nonaffiliated customers.
We have 0 employees. Services necessary to operate our business are provided to us by Williams and certain affiliates of Williams. We reimburse Williams and its affiliates for all direct and indirect expenses incurred or payments made (including salary, bonus, incentive compensation, and benefits) in connection with these services. Employees of Williams also provide general, administrative and management services to us, and we are charged for certain administrative expenses incurred by Williams. These charges are either directly identifiable or allocated to our assets. Direct charges are for goods and services provided by Williams at our request. Allocated charges are based on a three-factor formula, which considers revenues; property, plant, and equipment; and payroll. In management’s estimation, the allocation methodologies used are reasonable and result in a reasonable allocation to us of our costs of doing business incurred by Williams. We were billed $23.1$21.6 million and $45.8 million in the three and six months ended June 30, 2020, respectively, and $26.8 million and $48.9$43.7 million in the three and six months ended June 30, 2019,2021 and $23.1 million and $45.8 million in the three and six months ended June 30, 2020, respectively, for these services. Such expenses are primarily included in General and administrative and Operation and maintenance expenses on the accompanying Statement of Net Income.
During the six months ended June 30, 20202021 and 2019,2020, we declared and paid cash distributions to our parent of $88.0$99.0 million and $46.0$88.0 million, respectively. During July 2020,2021, we declared and paid an additional cash distribution of $36.0$34.0 million to our parent.
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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.

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 20192020 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-monthsix-month periods ended June 30, 20202021 and 2019.2020. Variances due to changes in natural gas prices and transportation volumes have little impact on revenues, because under our rate design methodology, the majority of overall cost of service is recovered through firm capacity reservation charges in our transportation rates.
Operating Revenues increased $0.8decreased $4.4 million, or less than 1approximately 2 percent, in the first six months of 20202021 as compared withto the first six months of 2019same period in 2020 primarily due to:
Natural gas transportation decreased $4.8 million for the six months ended June 30, 2021 compared to the same period in 2020. The decrease was primarily attributable to:
•$2.810.0 million higher natural gaslower firm transportation revenuesrevenue primarily resulting from the termination of two base agreements in the third quarter of 2020.
•Partially offset by an increase of $1.9 million in short-term firm transportation demand as a result of placingcolder weather in 2021,
•$1.7 million from three new contracts executed in the North Seattle Upgrade intothird quarter of 2020, and
•$1.0 million from a project placed in service in November 2019 and new redelivery contracts, mostly offset by2020.
Natural gas storage increased $0.5 million for the termination of several base agreements.
•The increase in natural gas transportation revenues was partly offset by a $2.0 million decrease in natural gas storage
resulting primarily from lower gas injections, a decrease in the use of Park and Loan services and lower demand for
interruptible storage space in 2020 compared to 2019.
In the periodssix months ended June 30, 20202021 compared to the same period in 2020. The increase was primarily a result of higher capacity releases at the Clay Basin storage facility and 2019, higher park and loan services in 2021.
Transportation services accounted for 97 percent and gas storage services accounted for 3 percent of our operating revenues for both periods ended June 30, 2021 and 96 percent and 4 percent, respectively.2020.
Operating Expenses decreased $0.4 million, or less than 1 percent, forin the first six months of 20202021 as compared to the same period in 2019, mostly due to:2020.
•$2.0 million reduced costs resulting from the voluntary separation program and restructuring initiated by
Williams in 2019 including:
–$2.1 million lower internal operations and maintenance labor and benefits;
–$1.0 million lower severance expense; offset by
–$1.1 million higher relocation expenses.
•$0.6 million lower allocated and billed costs from our parent and affiliates;
•Partially offset by $2.3 million higher depreciation primarily as a result of placing the North Seattle Upgrade into
service in late 2019.
Other (income) and other expenses, net had an unfavorable change of $1.9$0.8 million, or 17approximately 6 percent, forin the first six months of 20202021 as compared to 2019the same period in 2020 primarily due to lower allowances for funds used in construction and tax gross upsinterest income on prepayments as a result lower capitalized construction costs. In addition, higher interest was accrued as a result of the increasing reserve for customer tax refunds as required by RP17-1136.our note with Williams.
Recent Developments
COVID-19
The outbreak of novel coronavirus (COVID-19)COVID-19 has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. We are monitoringcontinue to monitor the COVID-19 pandemic and are takinghave taken steps intended to protect the safety of our customers, employees and communities, and to support the continued delivery of safe and reliable service to our customers and the communities we serve. We are continuing to monitor developments with respect to the outbreak and note the following:
Our financial condition, results of operations, and liquidity have not been materially impacted by direct effects of COVID-19.

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We believe we have the ability to access the debt market if necessary, and continue to have significant levels
Table of unused capacity on our revolving credit facility with no significant debt maturities in the near future.Contents
We have implemented remote working arrangements where possible and restricted business-related travel. Implementation of these measures has not required material expenditures or significantly impacted our ability to operate our business.
Our remote working arrangements have not significantly impacted our internal controls over financial reporting and disclosure controls and procedures.

Item 4. Controls and Procedures
Our management, including our Senior Vice President and our Vice President and Chief Accounting Officer, does not expect that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) (Disclosure Controls) or our internal control over financial reporting (Internal Controls) will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. We monitor our Disclosure Controls and Internal Controls and make modifications as necessary; our intent in this regard is that the Disclosure Controls and Internal Controls will be modified as systems change and conditions warrant.
Evaluation of Disclosure Controls and Procedures
An evaluation of the effectiveness of the design and operation of our Disclosure Controls was performed as of the end of the period covered by this report. This evaluation was performed under the supervision and with the participation of our management, including our Senior Vice President and our Vice President and Chief Accounting Officer. Based upon that evaluation, our Senior Vice President and our Vice President and Chief Accounting Officer concluded that these Disclosure Controls are effective at a reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There have been no changes during the second quarter of 20202021 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 4. 3. Contingent Liabilities and Commitments, included in the Notes to Financial Statements included under Part 1, Item 1. Financial Statements of this Form 10-Q, which information is incorporated by reference into this item.
Item 1A. Risk Factors

Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019, as supplemented by the disclosure in Part II, Item 1A. in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 includes certain risk factors that could materially affect our business, financial condition, or future results. Those Risk Factors have not materially changed.  




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

ExhibitDescription
Exhibit2Description
2
Certificate of Conversion of Northwest Pipeline GP (filed July 3, 2013 as Exhibit 2.1 to our current report on Form 8-K (File No. 001-07414) and incorporated herein by reference).
3.1
Certificate of Formation of Northwest Pipeline LLC (filed July 3, 2013 as Exhibit 2.2 to our current report on Form 8-K (File No. 001-07414) and incorporated herein by reference).
3.2
Operating Agreement of Northwest Pipeline LLC (filed July 3, 2013 as Exhibit 3.1 to our current report on Form 8-K (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. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH*XBRL Taxonomy Extension Schema.
101.CAL*XBRL Taxonomy Extension Calculation Linkbase.
101.DEF*XBRL Taxonomy Definition Linkbase.
101.LAB*XBRL Taxonomy Extension Label Linkbase.
101.PRE*XBRL Taxonomy Extension Presentation Linkbase.
104*
Cover Page Interactive Data File. The cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document (contained in Exhibit 101).

*Filed herewith.
**Furnished herewith.



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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
NORTHWEST PIPELINE LLC
Registrant
Date:August 3, 20202, 2021By:/s/ Billeigh W. Mark
Billeigh W. Mark

Controller
(Principal Accounting Officer)