Employee Benefit Plans

12 Months Ended

Dec. 31, 2012

Employee Benefit Plans [Abstract]

Employee Benefit Plans

Note 8. Employee Benefit Plans

We have noncontributory defined benefit pension plans in which all eligible employees participate. Currently, eligible employees earn benefits primarily based on a cash balance formula. Various other formulas, as defined in the plan documents, are utilized to calculate the retirement benefits for plan participants not covered by the cash balance formula. At the time of retirement, participants may elect, to the extent they are eligible for the various options, to receive annuity payments, a lump sum payment, or a combination of a lump sum and annuity payments. In addition to our pension plans, we currently provide subsidized retiree medical and life insurance benefits (other postretirement benefits) to certain eligible participants. Generally, employees hired after December 31, 1991, are not eligible for the subsidized retiree medical benefits, except for participants that were employees or retirees of Transco Energy Company on December 31, 1995, and other miscellaneous defined participant groups. Certain of these other postretirement benefit plans, particularly the subsidized retiree medical benefit plans, provide for retiree contributions and contain other cost-sharing features such as deductibles, co-payments, and co-insurance. The accounting for these plans anticipates future cost-sharing that is consistent with our expressed intent to increase the retiree contribution level generally in line with health care cost increases.

Funded Status

The following table presents the changes in benefit obligations and plan assets for pension benefits and other postretirement benefits for the years indicated. The spin-off on December 31, 2011, of WPX did not have a significant impact on our pension and other postretirement benefit plans. (See Note 3). Generally, our pension and other postretirement benefit plans have retained the benefit obligations associated with vested benefits earned by eligible employees that transferred to WPX due to the spin-off. No plan assets transferred to WPX.

						Other
						Postretirement
		Pension Benefits				Benefits
		2012		2011		2012		2011
		(Millions)
Change in benefit obligation:
	Benefit obligation at beginning of year	$	1,441	$	1,267	$	339	$	289
	Service cost		39		41		3		2
	Interest cost		55		64		13		15
	Plan participants’ contributions		-		-		5		6
	Benefits paid		(75)		(66)		(20)		(22)
	Medicare Part D and Early Retiree Reinsurance Program subsidies		-		-		3		4
	Plan amendment		-		-		(6)		(3)
	Actuarial loss (gain)		98		143		(6)		48
	Settlements		(9)		(8)		-		-
	Benefit obligation at end of year		1,549		1,441		331		339
Change in plan assets:
	Fair value of plan assets at beginning of year		965		971		159		162
	Actual return on plan assets		111		-		18		(2)
	Employer contributions		79		68		13		15
	Plan participants’ contributions		-		-		5		6
	Benefits paid		(75)		(66)		(20)		(22)
	Settlements		(9)		(8)		-		-
	Fair value of plan assets at end of year		1,071		965		175		159
Funded status - underfunded		$	(478)	$	(476)	$	(156)	$	(180)
Accumulated benefit obligation		$	1,519	$	1,415

The underfunded status of our pension plans and other postretirement benefit plans presented in the previous table are recognized in the Consolidated Balance Sheet within the following accounts:

		December 31,
		2012		2011
		(Millions)
Underfunded pension plans:
	Current liabilities	$	3	$	7
	Noncurrent liabilities		475		469
Underfunded other postretirement benefit plans:
	Current liabilities		8		8
	Noncurrent liabilities		148		172

The plan assets within our other postretirement benefit plans are intended to be used for the payment of benefits for certain groups of participants. The current liabilities for the other postretirement benefit plans represent the current portion of benefits expected to be payable in the subsequent year for the groups of participants whose benefits are not expected to be paid from plan assets.

The pension plans' benefit obligation actuarial lossesof $98 million in 2012 and $143 million in 2011are primarily due to the impact of decreases in the discount rates utilized to calculate the benefit obligation. The 2012 benefit obligation actuarial gain of $6 million for our other postretirement benefit plans is primarily due to changes to claims experience and health care cost trend rates, offset by the impact of a decrease in the discount rate utilized to calculate the benefit obligation. The 2011benefit obligation actuarial loss of $48 million for our other postretirement benefit plans is primarily due to the impact of a decrease in the discount rate utilized to calculate the benefit obligation.In 2011, the actuarial loss includes a curtailment gain of $4 million for our pension plans and $1 million for our other postretirement benefit plans due to the spin-off of WPX.

At December 31, 2012 and 2011, all of our pension plans had a projected benefit obligation and accumulated benefit obligation in excess of plan assets.

The determination of net periodic benefitcostallows for the delayed recognition of gains and losses caused by differences between actual and assumed outcomes for items such as estimated return on plan assets, or caused by changes in assumptions for items such as discount rates or estimated future compensation levels. The net actuarial loss presented in the following table and recorded in accumulated othercomprehensive loss and net regulatory assets represents the cumulative net deferred loss from these types of differences or changes which have not yet been recognized in net periodic benefit cost. A portion of the net actuarial loss is amortized over the participants' average remaining future years of service, which is approximately 12 years for our pension plans and approximately 8 years for our other postretirement benefit plans.

Pre-tax amounts not yet recognized in net periodic benefit costat December 31 are as follows:

							Other
							Postretirement
			Pension Benefits				Benefits
			2012		2011		2012		2011
			(Millions)
Amounts included in accumulated other comprehensive loss:
		Prior service (cost) credit	$	(1)	$	(2)	$	7	$	8
		Net actuarial loss		(828)		(835)		(35)		(40)
Amounts included in net regulatory assets associated with our
	FERC-regulated gas pipelines:
		Prior service credit		N/A		N/A	$	14	$	14
		Net actuarial loss		N/A		N/A		(67)		(85)

In addition to the net regulatory assets included in the previous table, differences in the amount of actuarially determined net periodicbenefit costfor our other postretirement benefit plans and the other postretirement benefit costs recovered in rates for our FERC-regulated gas pipelines are deferred as a regulatory asset or liability. We have net regulatory liabilities of $38 million at December 31, 2012 and $34 million at December 31, 2011 related to these deferrals. These amounts will be reflected in future rates based on the gas pipelines' rate structures.

Net Periodic Benefit Cost

Net periodic benefit costfor the years ended December 31 consist of the following:

								Other
		Pension Benefits						Postretirement Benefits
		2012		2011		2010		2012		2011		2010
		(Millions)
Components of net periodic benefit cost:
	Service cost	$	39	$	41	$	35	$	3	$	2	$	2
	Interest cost		55		64		64		13		15		15
	Expected return on plan assets		(64)		(77)		(71)		(9)		(10)		(9)
	Amortization of prior service cost (credit)		1		1		1		(7)		(11)		(14)
	Amortization of net actuarial loss		53		38		35		8		3		3
	Net actuarial loss from settlements		5		4		-		-		-		-
	Amortization of regulatory asset		-		-		-		-		1		1
Net periodic benefit cost		$	89	$	71	$	64	$	8	$	-	$	(2)

Included in net periodic benefit costin 2011 and 2010 in the previous table is cost associated with active and former employees that supported WPX's operations. This cost was directly charged to WPX and is included in income (loss) from discontinued operations. These amounts totaled $8 million in 2011 and $7 million in 2010 for our pension plans and totaled less than $1 million in 2011 and 2010 for our other postretirement benefit plans. The spin-off of WPX did not have a significant impact on net periodic benefit cost in 2012.

Items Recognized in Other Comprehensive Income (Loss)

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) before taxes for the years ended December 31 consist of the following:

										Other
				Pension Benefits						Postretirement Benefits
				2012		2011		2010		2012		2011		2010
				(Millions)
Other changes in plan assets and benefit obligations
	recognized in other comprehensive income (loss):
		Net actuarial gain (loss)		$	(51)	$	(220)	$	(71)	$	2	$	(21)	$	(12)
		Prior service credit			-		-		-		2		2		-
		Amortization of prior service cost (credit)			1		1		1		(3)		(4)		(5)
		Amortization of net actuarial loss and loss
			from settlements		58		42		35		3		1		1
Other changes in plan assets and benefit obligations
	recognized in other comprehensive income (loss).........			$	8	$	(177)	$	(35)	$	4	$	(22)	$	(16)

Other changes in plan assets and benefit obligations for our other postretirement benefit plans associated with our FERC-regulated gas pipelines are recognized in net regulatory assets at December 31, 2012, and include a netactuarial gainof $13 million,prior service credit of $4 million, amortization of prior service credit of $4 million, and amortization of net actuarial loss of $5 million. At December 31, 2011, amounts recognized in net regulatory assets included a net actuarial loss of $39 million, prior service credit of $1 million, amortization of prior service credit of $7 million, and amortization of net actuarial loss of $2 million. At December 31, 2010, amounts recognized in net regulatory assets included a net actuarial lossof $10 million, prior service credit of $1 million, amortization of prior service credit of $9 million, and amortization of net actuarial loss of $2 million.

Pre-tax amounts expected to be amortized in net periodic benefit cost in 2013 are as follows:

						Other
			Pension			Postretirement
			Benefits			Benefits
			(Millions)
Amounts included in accumulated other comprehensive loss:
		Prior service cost (credit)		$	1		$	(3)
		Net actuarial loss			60			3
Amounts included in net regulatory assets associated with our FERC-
	regulated gas pipelines:
		Prior service credit			N/A		$	(5)
		Net actuarial loss			N/A			6

Key Assumptions

The weighted-average assumptions utilized to determine benefit obligations as of December 31 are as follows:

			Other
			Postretirement
	Pension Benefits		Benefits
	2012	2011	2012	2011
Discount rate	3.43%	3.98%	3.77%	4.22%
Rate of compensation increase	4.57	4.52	N/A	N/A

The weighted-average assumptions utilized to determine net periodicbenefit costfor the years ended December31 are as follows:

				Other
	Pension Benefits			Postretirement Benefits
	2012	2011	2010	2012	2011	2010
Discount rate	3.98%	5.19%	5.78%	4.22%	5.35%	5.80%
Expected long-term rate of return on plan assets	6.30	7.50	7.50	5.71	6.54	6.51
Rate of compensation increase	4.52	5.00	5.00	N/A	N/A	N/A

The discount rates for our pension and other postretirement benefit plans were determined separately based on an approach specific to our plans. The year-end discount rates were determined considering a yield curve comprised of high-quality corporate bonds published by a large securities firm and the timing of the expected benefit cash flows of each plan. The decrease in discount rates from December 31, 2011 to December 31, 2012 is primarily due to the general market decline in yields on long-term,high-quality corporate debt securities.

The expected long-term rates of return on plan assets were determined by combining a review of the historical returns realized within the portfolio, the investment strategy included in the plans' Investment Policy Statement, and capital market projections for the asset classes in which the portfolio is invested and the target weightings of each asset class. The expected long-term rates of return on plan assets assumptions decreased in 2012 as a result of an increase in the fixedincome securities asset allocation, as well as a decrease in the forward-looking capital market projections.

The expected return on plan assets component of net periodic benefitcostis calculated using the market-related value of plan assets. For assets held in our pension plans, the market-related value of plan assets is equal to the fair value of plan assets adjusted to reflect amortization of gains or losses associated with the difference between the expected return on plan assets and the actual return on plan assets over a five-year period. Additionally, the market-related value of plan assets may be no more than 110 percent or less than 90 percent of the fair value of plan assets at the beginning of the year. The market-related value of plan assets for our other postretirement benefit plans is equal to the unadjusted fair value of plan assets at the beginning of the year.

The mortality assumptions used to determine the obligations for our pension and other postretirement benefit plans are the estimate of expected mortality rates for the participants in these plans. The selected mortality tables are among the most recent tables available and include projected mortality improvements.

The assumed health care cost trend rate for 2013 is 8.2 percent. This ratedecreases to 5.0 percent by 2021. The health care cost trend rate assumption has a significant effect on the amounts reported. A one-percentage-point change in assumed health care cost trend rates would have the following effects:

	Point increase			Point decrease
	(Millions)
Effect on total of service and interest cost components		$	2		$	(2)
Effect on other postretirement benefit obligation			46			(38)

Plan Assets

The investment policy for our pension and other postretirement benefit plans provides for an investment strategy in accordance with ERISA, which governs the investment of the assets in a diversified portfolio. The plans follow a policy of diversifying the investments across various asset classes and investment managers. Additionally, the investment returns on approximately 40 percent of the other postretirement benefit plan assets are subject to income tax; therefore, certain investments are managed in a tax efficient manner.

The pension plans' target asset allocation range at December 31, 2012 was 54 percent to 66 percent equity securities, which includes the commingled investment funds invested in equity securities, and 36 percent to 44 percent fixed income securities, including the fixed income commingled investment fund, and cash management funds. Within equity securities, the target range for U.S. equity securities is 37 percent to 45 percent and international equity securities is 17 percent to 21 percent. The asset allocation continues to be weighted toward equity securities since the obligations of the pension and other postretirement benefit plans are long-term in nature and historically equity securities have outperformed other asset classes over long periods of time.

Equity security investments are restricted to high-quality, readily marketable securities that are actively traded on the major U.S. and foreign national exchanges. Investment in Williams' securities or an entity in which Williams has a majority ownership is prohibited in the pension plans except where these securities may be owned in a commingled investment fund in which the plans' trusts invest. No more than 5 percent of the total stock portfolio valued at market may be invested in the common stock of any one corporation.

The following securities and transactions are not authorized:  unregistered securities, commodities or commodity contracts, short sales or margin transactions, or other leveraging strategies. Investment strategies using the direct holding of options or futures require approval and, historically, have not been used; however, these instruments may be used in commingled investment funds. Additionally, real estate equity and natural resource property investments are generally restricted.

Fixed income securities are generally restricted to high-quality, marketable securities that may include, but are not necessarily limited to, U.S. Treasury securities, U.S. government guaranteed and nonguaranteed mortgage-backed securities, government and municipal bonds, and investment grade corporate securities. The overall rating of the fixed income security assets is generally required to be at least “A,” according to the Moody's or Standard & Poor's rating systems. No more than 5 percent of the total fixed income portfolio may be invested in the fixed income securities of any one issuer with the exception of bond index funds and U.S. government guaranteed and agency securities.

During 2012, nine active investment managers and one passive investment manager managed substantially all of the pension plans' funds and four active investment managers and one passive investment manager managed the other postretirement benefit plans' funds. Each of the managers had responsibility for managing a specific portion of these assets and each investment manager was responsible for 1 percent to 15 percent of the assets.

The pension and other postretirement benefit plans' assets are held primarily in equity securities, including commingled investment funds invested in equity securities, and fixed income securities, including a commingled fund invested in fixed income securities. Within the plans' investment securities, there are no significant concentrations of risk because of the diversity of the types of investments, diversity of the various industries, and the diversity of the fund managers and investment strategies. Generally, the investments held in the plans are publicly traded, therefore, minimizing liquidity risk in the portfolio.

The fair values of our pension plan assets at December 31, 2012 and 2011, by asset class are as follows:

				2012
				Level 1		Level 2		Level 3		Total
				(Millions)
Pension assets:
	Cash management fund (1)			$	21	$	-	$	-	$	21
	Equity securities:
		U.S. large cap			169		-		-		169
		U.S. small cap			115		-		-		115
		International developed markets large cap growth			1		61		-		62
		Emerging markets growth			3		18		-		21
		Preferred stock			6		-		-		6
	Commingled investment funds:
		Equities - U.S. large cap (2)			-		146		-		146
		Equities - Emerging markets value (3)			-		33		-		33
		Equities - International developed markets large cap value (4)			-		83		-		83
		Fixed income - Corporate bonds (5)			-		150		-		150
	Fixed income securities (6):
		U.S. Treasury securities			22		-		-		22
		Mortgage-backed securities			-		68		-		68
		Corporate bonds			-		171		-		171
	Insurance company investment contracts and other				-		4		-		4
			Total assets at fair value at December 31, 2012	$	337	$	734	$	-	$	1,071

				2011
				Level 1		Level 2		Level 3		Total
				(Millions)
Pension assets:
	Cash management fund (1)			$	43	$	-	$	-	$	43
	Equity securities:
		U.S. large cap			170		-		-		170
		U.S. small cap			121		-		-		121
		International developed markets large cap growth			4		57		-		61
		Emerging markets growth			3		9		-		12
	Commingled investment funds:
		Equities - U.S. large cap (2)			-		147		-		147
		Equities - Emerging markets value (3)			-		27		-		27
		Equities - International developed markets large cap value (4)			-		69		-		69
		Fixed income - Corporate bonds (5)			-		58		-		58
	Fixed income securities (6):
		U.S. Treasury securities			16		-		-		16
		Mortgage-backed securities			-		65		-		65
		Corporate bonds			-		169		-		169
	Insurance company investment contracts and other				-		7		-		7
			Total assets at fair value at December 31, 2011	$	357	$	608	$	-	$	965

The fair values of our other postretirement benefits plan assets at December 31, 2012 and 2011, by asset class are as follows:

				2012
				Level 1		Level 2		Level 3		Total
				(Millions)
Other postretirement benefit assets:
	Cash management funds (1)			$	14	$	-	$	-	$	14
	Equity securities:
		U.S. large cap			42		-		-		42
		U.S. small cap			21		-		-		21
		International developed markets large cap growth			-		13		-		13
		Emerging markets growth			1		4		-		5
		Preferred stock			1		-		-		1
	Commingled investment funds:
		Equities - U.S. large cap (2)			-		15		-		15
		Equities - Emerging markets value (3)			-		3		-		3
		Equities - International developed markets large cap value (4)			-		9		-		9
		Fixed income - Corporate bonds (5)			-		15		-		15
	Fixed income securities (7):
		U.S. Treasury securities			2		-		-		2
		Government and municipal bonds			-		10		-		10
		Mortgage-backed securities			-		7		-		7
		Corporate bonds			-		18		-		18
			Total assets at fair value at December 31, 2012	$	81	$	94	$	-	$	175

				2011
				Level 1		Level 2		Level 3		Total
				(Millions)
Other postretirement benefit assets:
	Cash management funds (1)			$	16	$	-	$	-	$	16
	Equity securities:
		U.S. large cap			42		-		-		42
		U.S. small cap			20		-		-		20
		International developed markets large cap growth			1		12		-		13
		Emerging markets growth			1		1		-		2
	Commingled investment funds:
		Equities - U.S. large cap (2)			-		15		-		15
		Equities - Emerging markets value (3)			-		3		-		3
		Equities - International developed markets large cap value (4)			-		7		-		7
		Fixed income - Corporate bonds (5)			-		6		-		6
	Fixed income securities (7):
		U.S. Treasury securities			2		-		-		2
		Government and municipal bonds			-		10		-		10
		Mortgage-backed securities			-		6		-		6
		Corporate bonds			-		17		-		17
			Total assets at fair value at December 31, 2011	$	82	$	77	$	-	$	159

• The stated intent of these funds is to invest in high creditquality, short-term corporate, and government money market debt securities that have remaining maturities of approximately one year or less, and are deemed to have minimal credit risk.
• The stated intent of this fund is to invest primarily in equity securities comprising the Standard & Poor's 500 Index. The investment objective of the fund is to approximate the performance of the Standard & Poor's 500 Index over the long term. The fund manager retains the right to restrict withdrawals from the fund so as not to disadvantage other investors in the fund.
• The stated intent of this fund is to invest in equity securities of international emerging markets for the purpose of capital appreciation. The fund invests primarily in common stocks in the financial, consumer goods, information technology, energy, telecommunications, materials, and industrialsectors. The plans' trustee is required to notify the fund manager ten days prior to a withdrawal from the fund. The fund manager retains the right to restrict withdrawals from the fund so as not to disadvantage other investors in the fund.
• The stated intent of this fund is to invest in a diversified portfolio of international equity securities for the purpose of capital appreciation. The fund invests primarily in common stocks in the consumer goods, financial, health care, industrial, materials, energy,and information technology sectors. The plans' trustee is required to notify the fund manager ten days prior to a withdrawal from the fund. The fund manager retains the right to restrict withdrawals from the fund so as not to disadvantage other investors in the fund.
• The stated intent of this fund is to invest in U.S. Corporate bonds and U.S. Treasury securities. The fund is managed to closely match the characteristics of a long-term corporate bond index fund and seeks to maintain an average credit quality target of A- or above and a maximum 10 percent allocation to BBB rated securities. The fund's target duration is approximately 20 years. The trustee of the fund reserves the right to delay the processing of deposits or withdrawals in order to ensure that securities transactions will be carried out in an orderly manner.
• The weighted-average credit quality rating of the pension assets fixed income security portfolio is investment grade with a weighted-average duration of 5.7 years for 2012 and 5.6 years for 2011.
• The weighted-average credit quality rating of the other postretirement benefit assets fixed income security portfolio is investment grade with a weighted-average duration of 4.9 years for 2012 and 4.8 years for 2011.

The fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement of an asset.

Shares of the cash management funds are valued at fair value based on published market prices as of the close of business on the last business day of the year, which represents the net asset values of the shares held.

The fair values of equity securities traded on U.S. exchanges are derived from quoted market prices as of the close of business on the last business day of the year. The fair values of equity securities traded on foreign exchanges are also derived from quoted market prices as of the close of business on an active foreign exchange on the last business day of the year. However, the valuation requires translation of the foreign currency to U.S. dollars and this translation is considered an observable input to the valuation.

The fair value of all commingled investment funds are estimated based on the net asset values per unit of each of the funds. The net asset values per unit represent the aggregate value of the funds assets at fair value less liabilities, divided by the number of units outstanding.

The fair value of fixed income securities, except U.S. Treasury notes and bonds, are determined using pricing models. These pricing models incorporate observable inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads for similar securities to determine fair value. The U.S. Treasury notes and bonds are valued at fair value based on closing prices on the last business day of the year reported in the active market in which the security is traded.

The investment contracts with insurance companies are valued at fair value by discounting the cash flow of a bond using a yield to maturity based on an investment grade index or comparable index with a similar maturity value, maturity period, and nominal coupon rate.

There have been no significant changes in the preceding valuation methodologies used at December 31, 2012 and 2011. Additionally, there were no transfers or reclassifications of investments between Level 1 and Level 2from December 2011 to December 2012. If transfers between levels had occurred, the transferswould have been recognized as of the end of the period.

Plan Benefit Payments and Employer Contributions

Following are the expected benefits to be paid by the plans and the expected federal prescription drug subsidy to be received in the next ten years. These estimates are based on the same assumptions previously discussed and reflect future service as appropriate. The actuarial assumptions are based on long-term expectations and include, but are not limited to, assumptions as to average expected retirement age and form of benefit payment. Actual benefit payments could differ significantly from expected benefit payments if near-term participant behaviors differ significantly from the actuarial assumptions.

							Federal
				Other			Prescription
	Pension			Postretirement			Drug
	Benefits			Benefits			Subsidy
	(Millions)
2013		$	77		$	16		$	(2)
2014			86			17			(3)
2015			92			18			(3)
2016			97			18			(3)
2017			103			19			(3)
2018-2022			591			107			(18)

In 2013, we expect to contribute approximately $90 million to our tax-qualified pension plans and approximately $1 million to our nonqualified pension plans, for a total of approximately $91 million, and approximately $9 million to our other postretirement benefit plans.

Defined Contribution Plans

We also maintain defined contribution plans for the benefit of substantially all of our employees. Generally, plan participants may contribute a portion of their compensation on a pre-tax and after-tax basis in accordance with the plans' guidelines. We match employees' contributions up to certain limits. Our matching contributions charged to expense were $25 million in 2012, $28 million in 2011, and $26 million in 2010. Included in these amounts are matching contributions for employees that supported WPX's operations that were directly charged to WPX and included in income (loss) from discontinued operationsthat totaled $5 million for both 2011 and 2010.