Related Party Transactions

12 Months Ended

Dec. 31, 2024

Related Party Transactions [Abstract]

Related Party Transactions [Text Block]

Note 4 – Related Party Transactions

Williams

Transactions with Equity-Method Investees

Williams has costs and expenses associated with its equity-method investees of $266 million, $776 million, and $1.3 billion for 2024, 2023, and 2022, respectively in its Consolidated Statement of Income. Substantially all of

these expenses are included in Product costs. Williams also has revenue from its equity-method investees of $2 million, $5 million, and $76 million for 2024, 2023, and 2022, respectively. In addition, Williams has $1 million and $2 million included in Trade accounts and other receivables and $19 million and $33 million included in Accounts payable in its Consolidated Balance Sheet with its equity-method investees at December 31, 2024 and 2023, respectively.

Williams has operating agreements with certain equity-method investees. These operating agreements typically provide for reimbursement or payment to Williams for certain direct operational payroll and employee benefit costs, materials, supplies, and other charges and also for management services. The total charges to equity-method investees for these fees are $52 million, $64 million, and $65 million for 2024, 2023, and 2022, respectively.

Board of Directors

Two members of Williams’ Board of Directors are also executive officers at certain of its counterparties. Williams recorded $59 million, $90 million, and $180 million in Product sales and $40 million, $25 million, and $86 million in Product costs in its Consolidated Statement of Income from these companies for the purchase and sale of natural gas for 2024, 2023, and 2022, respectively.

Transco and NWP Affiliate Transactions

Benefit Plans

Transco and NWP do not have employees. Certain of the costs charged to them by Williams associated with employees who directly support them are described below. Additionally, allocated corporate expenses from Williams also include amounts related to these same employee benefits, which are not included in the amounts presented immediately below.

Pension and Other Postretirement Benefit Plans

Williams’ pension and other postretirement benefit plans are single-employer plans. However, Transco and NWP follow multiemployer plan accounting whereby the amount charged to them and thus paid by them, is based on their share of net periodic benefit cost (see Note 7 – Employee Benefit Plans).

Pension costs charged to Transco by Williams were $1 million, $2 million, and $4 million for 2024, 2023, and 2022, respectively. NWP received pension credits from Williams of $1 million in 2024, $0 million in 2023, and pension charges of $1 million in 2022.

Williams makes annual cash contributions to the pension plans, based on annual actuarial estimates, which Transco recovers through rates that are set through periodic general rate filings. Effective with Transco’s Docket No. RP18-1126 rate case settlement, any amounts of annual contributions that fall below a threshold are recorded as adjustments to income and refunded through future rate adjustments. The amounts of deferred pension collections recorded as regulatory liabilities at December 31, 2024 and 2023 were $30 million and $26 million, respectively. Also effective with Transco’s Docket No. RP18-1126 rate case settlement, the pension regulatory liability as of March 1, 2019 was amortized over a five-year period, and the amortization was completed in February 2024.

Transco recognized other postretirement benefit income of $8 million, $6 million, and $5 million for 2024, 2023, and 2022, respectively, while NWP recognized other postretirement benefit income of $1 million, $0 million, and $1 million, respectively for the same periods. These credits were recorded as regulatory liabilities.

Transco and NWP have been allowed by rate case settlements to collect or refund in future rates any differences between the actuarially determined costs and amounts currently being recovered in rates related to other postretirement benefits. Any differences between the annual actuarially determined cost and amounts currently being recovered in rates are recorded as regulatory assets or liabilities and collected or refunded through future rate

adjustments. The amounts of other postretirement benefits costs deferred as regulatory liabilities at December 31, 2024 and 2023 are $31 million and $31 million, for Transco respectively, and $43 million and $42 million, for NWP respectively. Effective with the Docket No. RP18-1126 rate case settlement, Transco’s other postretirement benefits regulatory liability as of March 1, 2019 was amortized over a period of approximately five years, and the amortization was completed in July 2024.

Defined Contribution Plan

Williams maintains a defined contribution plan for substantially all of its employees. Williams charged Transco compensation expense of $13 million, $12 million, and $11 million in 2024, 2023, and 2022, respectively, and charged NWP compensation expense of $3 million, $3 million, and $3 million in 2024, 2023, and 2022, respectively, for Williams’ company contributions to this plan.

Employee Stock-Based Compensation Plan Information (see Note 15 – Equity-Based Compensation)

Williams currently bills Transco and NWP directly for compensation expense related to stock-based compensation awards based on the fair value of the awards. Transco and NWP are also billed for their proportionate share of Williams’ and other affiliates’ stock-based compensation expense through various allocation processes.

Total stock-based compensation expense for the years ended December 31, 2024, 2023, and 2022 was $6 million, $6 million, and $6 million, for Transco respectively, and $2 million, $2 million, and $1 million, for NWP respectively.

Cash Management Program

Transco and NWP are participants in Williams’ cash management program, and thus make advances to and receive advances from Williams. At December 31, 2024 and 2023, Transco’s advances to Williams totaled approximately $638 million and $1.4 billion, respectively. These advances are represented by demand notes and are classified as Trade accounts and other receivables - Advances to affiliate in the Balance Sheet. NWP’s advances from Williams totaled approximately $26 million at December 31, 2024. These advances from Williams are classified as Payables - Advances from affiliate. Advances to Williams from NWP totaled approximately $158 million at December 31, 2023. These advances are represented by demand notes and are classified as Trade accounts and other receivables - Advances to affiliate in the Balance Sheet. Advances are stated at the historical carrying amounts. Interest expense and income are recognized when earned and the collectability is reasonably assured. The interest rate on these intercompany demand notes is based upon the daily overnight investment rate paid on Williams’ excess cash at the end of each month, which was approximately 4 percent at December 31, 2024. The net interest income from these advances was $51 million, $81 million, and $31 million during years ended December 31, 2024, 2023, and 2022, for Transco respectively, and $5 million, $8 million, and $5 million for the years ended December 31, 2024, 2023, and 2022 for NWP respectively. Such interest income is included in Interest income in the Statement of Net Income for Transco and Other income (expense) – net in the Statement of Net Income for NWP.

Other Affiliate Transactions

Included in Transco’s Total revenues in the Statement of Net Income for 2024, 2023, and 2022 are revenues received from affiliates of $76 million, $56 million, and $89 million, respectively.

Included in Transco’s Natural gas product costs in the Statement of Net Income for 2024, 2023, and 2022 are costs of gas purchased from affiliates of $5 million, $7 million, and $18 million, respectively. All gas purchases are made at market or contract prices.

Services necessary to operate Transco and NWP are provided by Williams and certain affiliates of Williams. Transco and NWP 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, and Transco and NWP are charged for certain administrative expenses incurred by Williams. These charges are either directly assigned or allocated. Allocated charges are specific or general. Specific allocations are based on a relationship with the delivery of services and general allocations 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 of costs of doing business incurred by Williams. For the years ended December 31, 2024, 2023, and 2022, Transco has recorded $344 million, $324 million, and $345 million, respectively, and NWP has recorded $91 million, $86 million, and $88 million, respectively, for these service expenses, which are primarily included in Operating and maintenance expenses and Selling, general, and administrative expenses in the Statement of Net Income.

Transco provides services to certain of its affiliates. Transco recorded reductions in operating expenses for services provided to and reimbursed by affiliates of $6 million, $14 million, and $10 million for the years ended December 31, 2024, 2023, and 2022, respectively.

During January 2025, Transco and NWP declared and paid cash distributions of $246 million and $24 million, respectively, to Williams, and Williams made a cash contribution to NWP of $85 million.