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Fair Value Measurements, Guarantees, and Concentration of Credit Risk
 12 Months Ended
Dec. 31, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements, Guarantees, and Concentration of Credit Risk [Text Block]
Note 16 – Fair Value Measurements, Guarantees, and Concentration of Credit Risk
The following table presents, by level within the fair value hierarchy, certain of Williams’, Transco’s, and NWP’s significant financial assets and liabilities. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, and commercial paper approximate fair value because of the short-term nature of these instruments. Therefore, these assets and liabilities are not presented in the following table.
Fair Value Measurements Using
Carrying
Amount		Fair
Value		Quoted
Prices In
Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
(Millions)
Assets (liabilities) at December 31, 2024:
Measured on a recurring basis:
ARO Trust investments - Transco
$297 $297 $297 $— $— 
Commodity derivative assets (1)
344 726 427 188 111 
Commodity derivative liabilities (1)
(400)(1,070)(532)(475)(63)
Additional disclosures:
Debt by issuer, including current portion:
Williams
(20,167)(19,517)— (19,517)— 
Transco(5,235)(5,276)— (5,276)— 
NWP(582)(573)— (573)— 
MountainWest(372)(364)— (364)— 
Gulf Coast Storage deferred consideration obligation (Note 3)
(100)(100)— (100)— 
Total debt
(26,456)(25,830)— (25,830)— 
Guarantees(36)(28)— (12)(16)
Assets (liabilities) at December 31, 2023:
Measured on a recurring basis:
ARO Trust investments - Transco
$269 $269 $269 $— $— 
Commodity derivative assets (1)(2)
314 866 514 196 156 
Commodity derivative liabilities (1)(2)
(287)(841)(376)(362)(103)
Interest rate derivatives
66— 6— 
Additional disclosures:
Debt by issuer, including current portion:
Williams
(18,837)(18,494)— (18,494)— 
Transco(5,261)(5,438)— (5,438)— 
NWP(581)(581)— (581)— 
MountainWest(369)(375)— (375)— 
RMM deferred consideration obligation (Note 3)
(665)(665)— (665)— 
Total debt
(25,713)(25,553)— (25,553)— 
Guarantees(37)(28)— (12)(16)
(1)The carrying amount is presented net of counterparty offsetting arrangements and collateral (see Note 17 – Commodity Derivatives).
(2)Previously, the fair value of Williams’ commodity derivative assets and liabilities were disclosed by level within the fair value hierarchy net of counterparty offsetting arrangements. The December 31, 2023, amounts have been corrected to disclose the fair values by level on a gross basis, as presented above.
Fair Value Methods
The following methods and assumptions are used in estimating the fair value of financial instruments:
Assets Measured at Fair Value on a Recurring Basis
ARO Trust investments
Transco is entitled to collect rates in the amounts necessary to fund its future AROs and deposits a portion of the collected rates, pursuant to the terms of its Docket Number RP18-1126 rate case settlement, into an ARO Trust. The ARO Trust invests in a moderate risk portfolio of actively traded mutual funds that are measured at fair value on a recurring basis based on quoted prices in an active market and is reported in Regulatory assets, deferred charges, and other in Williams’ Consolidated Balance Sheet and in Deferred charges and other in the Transco Balance Sheet. The Money Market Funds held in the ARO Trust are considered investments. Both realized and unrealized gains and losses are ultimately recorded to the ARO regulatory asset.
Pursuant to the approved stipulation and agreement in Docket Number RP18-1126 the annual funding obligation effective March 1, 2020, is approximately $16 million, with deposits made monthly.
Transco investments within the ARO Trust were as follows:
December 31, 2024December 31, 2023
Amortized Cost Basis
Fair Value
Amortized Cost Basis
Fair Value
(Millions)
Money Market Funds
$27 $27 $26 $26 
U.S. Equity Funds
53 146 53 120 
International Equity Funds
32 40 32 39 
Municipal Bond Funds
88 84 87 84 
Total
$200 $297 $198 $269 
Commodity derivatives
Williams’ commodity derivatives include exchange-traded contracts and OTC contracts, which consist of physical forwards, futures, and swaps that are measured at fair value on a recurring basis. Williams also has other derivatives related to asset management agreements and other contracts that require physical delivery. Derivatives classified as Level 1 are valued using New York Mercantile Exchange (NYMEX) futures prices. Derivatives classified as Level 2 are valued using basis transactions that represent the cost to transport natural gas from a NYMEX delivery point to the contract delivery point. These transactions are based on quotes obtained either through electronic trading platforms or directly from brokers. Derivatives classified as Level 3 are valued using a combination of observable and unobservable inputs. See Note 17 – Commodity Derivatives for additional information.
The following table presents a reconciliation of changes in fair value of the net commodity derivatives classified as Level 3 in the fair value hierarchy.
Year Ended December 31,
20242023
(Millions)
Balance at beginning of period$53 $(56)
Gains (losses) included in Williams’ Consolidated Statement of Income
(5)91 
Purchases, issuances, and settlements(1)20 
Transfers into Level 31 — 
Transfers out of Level 3— (2)
Balance at end of period$48 $53 
A substantial portion of the December 31, 2024, and December 31, 2023, Level 3 derivatives relate to a long-term physical natural gas purchase contract associated with an ongoing pipeline expansion project. The valuation of this contract reflects the extrapolation of forward natural gas prices for periods beyond observable price curves, which is considered a significant unobservable input.
Interest rate derivatives
At December 31, 2023, Williams held interest rate derivative agreements with notional amounts totaling $1.15 billion. During 2024, Williams entered into additional agreements totaling $950 million of notional value and terminated agreements totaling $1.75 billion of notional value coinciding with issuances of long-term debt (see Note 13 – Debt and Banking Arrangements). At December 31, 2024, Williams holds interest rate derivative agreements with notional amounts totaling $350 million. The fair value of these derivatives is determined using discounted cash flows considering forward interest rates and the terms of the agreements, corroborated by counterparty valuations, and is classified as a Level 2 measurement. These derivatives are designated as cash flow hedges to reduce interest rate exposure on future corporate debt issuances. Gains and losses on these derivative agreements are reflected as a component of AOCI and, after the termination of the agreements, are amortized to earnings over the term of the related debt as a component of Interest expense. These interest rate derivative agreements are reported in Derivative assets and Derivative liabilities.
Additional Fair Value Disclosures
Long-term debt, including current portion
The disclosed fair value of long-term debt is determined primarily by a market approach using broker quoted indicative period-end bond prices. The quoted prices are based on observable transactions in less active markets for the debt or similar instruments. The fair values of the financing obligations associated with Transco’s Dalton, Leidy South, and Atlantic Sunrise projects, as well as the deferred consideration obligations associated with the RMM Acquisition and the Gulf Coast Storage Acquisition (see Note 3 – Acquisitions and Divestitures), all included within long-term debt including current portion, were determined using an income approach (see Note 13 – Debt and Banking Arrangements).
Guarantees
Guarantees primarily consist of a guarantee Williams has provided in the event of nonpayment by a previously owned communications subsidiary, Williams Communications Group, Inc., (WilTel), on a lease performance obligation that extends through 2042. Guarantees also include an indemnification related to a disposed operation.
To estimate the fair value of the WilTel guarantee, an estimated default rate is applied to the sum of the future contractual lease payments using an income approach. The estimated default rate is determined by obtaining the
average cumulative issuer-weighted default rate based on the credit rating of WilTel’s current owner and the term of the underlying obligation. The default rate is published by Moody’s Investors Service. The carrying value of the WilTel guarantee is reported in Other current liabilities. The maximum potential undiscounted liquidity exposure is approximately $22 million at December 31, 2024. The exposure declines systematically through the remaining term of WilTel’s obligation.
The fair value of the guarantee associated with the indemnification related to a disposed operation was estimated using an income approach that considered probability-weighted scenarios of potential levels of future performance. The terms of the indemnification do not limit the maximum potential future payments associated with the guarantee. The carrying value of this guarantee is reported in Regulatory liabilities, deferred income, and other.
Williams is required by its revolving credit agreement to indemnify lenders for certain taxes required to be withheld from payments due to the lenders and for certain tax payments made by the lenders. The maximum potential amount of future payments under these indemnifications is based on the related borrowings and such future payments cannot currently be determined. These indemnifications generally continue indefinitely unless limited by the underlying tax regulations and have no carrying value. Williams has never been called upon to perform under these indemnifications and there is no current expectation of a future claim.
Concentration of Credit Risk
Accounts receivable
The following table summarizes Williams’ concentration of receivables, net of allowances:
 December 31,
 20242023
 (Millions)
NGLs, natural gas, and related products and services$594 $589 
Regulated interstate natural gas transportation and storage339 310 
Marketing of natural gas and NGLs516 321 
Upstream activities45 72 
Accounts receivable related to revenues from contracts with customers
1,494 1,292 
Receivables from derivatives294 311 
Other accounts receivable75 52 
Trade accounts and other receivables - net$1,863 $1,655 
Williams’ customers include producers, distribution companies, industrial users, gas marketers, and pipelines primarily located in the continental United States. As a general policy, collateral is not required for receivables with the exception of the marketing receivables discussed below. Customers’ financial condition and credit worthiness are evaluated regularly and, based upon this evaluation, Williams may obtain collateral to support receivables.
Williams uses established credit policies to determine and monitor the creditworthiness of gas marketing and trading counterparties, including requirements to post collateral or other credit security, as well as the quality of pledged collateral. Collateral or credit security is most often in the form of cash or letters of credit from an investment-grade financial institution, but may also include U.S. government securities. Williams also utilizes netting agreements whenever possible to mitigate exposure to gas marketing and trading counterparty credit risk. When more than one derivative transaction with the same counterparty is outstanding and a legally enforceable netting agreement exists with that counterparty, the “net” mark-to-market exposure represents a reasonable measure of the credit risk with that counterparty.
Transco and NWP receivables from contracts with customers are included within Receivables - Trade and Receivables - Affiliates. Receivables that are not related to contracts with customers are included within the balance of Receivables - Advances to affiliate and Receivables - Other.
Revenues
Customers representing 10 percent or more of Transco’s and NWP’s revenues include:
Year Ended December 31,
202420232022
(Millions)
Transco:
Dominion Energy, Inc (1)$217 $287 $293 
NWP:
Puget Sound Energy, Inc.$136 $126 $131 
Cascade Natural Gas Corporation46 47 49 
Northwest Natural Gas Company47 47 49 
_______________
(1)    The 2024 amount is less than 10 percent of Transco’s revenue.