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NORTHWEST PIPELINE LLC - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations

July 31, 2014



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 2013 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-month periods ended June 30, 2014 and 2013. Variances due to changes in natural gas prices and transportation volumes have little impact on revenues, because under our rate design methodology, the majority of overall cost of service is recovered through firm capacity reservation charges in our transportation rates. Our operating revenues increased $1.1 million as compared to the first six months of 2013. This increase is primarily attributed to new revenues from the South Seattle Lateral, which was put into service on November 1, 2013. Transportation service and gas storage service accounted for 98 percent and 2 percent, respectively, of our operating revenues for the periods ended June 30, 2014 and June 30, 2013. Operating expenses increased $3.5 million, or 3 percent, due primarily to higher depreciation of $1.7 million, resulting from property additions; higher contractual services of $1.0 million resulting primarily from increased pipeline maintenance and repairs; and higher taxes, other than income taxes, of $0.5 million resulting primarily from higher property taxes. Capital Expenditures Our capital expenditures were $19.8 million and $21.9 million for the six months ended June 30, 2014 and 2013, respectively. Our capital expenditures estimate for 2014 is discussed in our 2013 Annual Report on Form 10-K. 8



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