<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

       [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934
                  For the fiscal year ended December 31, 2000

                                       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 CORPORATION
             (Exact name of registrant as specified in its charter)

          DELAWARE                                             87-0269236
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                             Identification No.)

 295 Chipeta Way, Salt Lake City, Utah                          84108
(Address of principal executive offices)                      (Zip Code)

                                 (801) 583-8800
              (Registrant's telephone number, including area code)

           Securities Registered Pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
                                                        Name of Each Exchange
       Title of Each Class                               On Which Registered
       -------------------                              --------------------
<S>                                                    <C>
      6.625 % Debentures due 2007                       New York Stock Exchange
      9% Debentures due 2022                            New York Stock Exchange
      7.125% Debentures due 2025                        New York Stock Exchange
</TABLE>

           Securities Registered Pursuant to Section 12(g) 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 [X] No[ ]

  Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

  State the aggregate market value of the voting stock held by non-affiliates of
the registrant.

            No voting stock of registrant is held by non-affiliates.

  Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.

<TABLE>
<CAPTION>
                 Class                         Outstanding at March 12, 2001
------------------------------------------     -----------------------------
<S>                                            <C>
Common stock, $1 par value                             1,000 shares
</TABLE>

                      Documents Incorporated by Reference:
                                      None

The registrant meets the conditions set forth in General Instruction (I)(1)(a)
and (b) of Form 10-K and is therefore filing this Form 10-K with the reduced
disclosure format.


<PAGE>   2

                                TABLE OF CONTENTS


                                     PART I

<TABLE>
<CAPTION>
Heading                                                                   Page
-------                                                                   ----
<S>       <C>                                                             <C>
Items 1.
 and  2.  BUSINESS AND PROPERTIES .......................................... 1

Item  3.  LEGAL PROCEEDINGS ................................................ 5

Item  4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (Omitted)..... 5


                                     PART II

Item  5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK-
           HOLDER MATTERS .................................................. 6

Item  6.  SELECTED FINANCIAL DATA (Omitted)................................. 6

Item  7.  MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS ..... 6

Item  8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ...................... 9

Item  9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
           AND FINANCIAL DISCLOSURE ........................................ 26

                                    PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (Omitted)...... 27

Item 11.  EXECUTIVE COMPENSATION (Omitted).................................. 27

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
           MANAGEMENT (Omitted)............................................. 27

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (Omitted).......... 27

                                     PART IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
           FORM 8-K     .................................................... 27
</TABLE>

<PAGE>   3

                         NORTHWEST PIPELINE CORPORATION

                                    FORM 10-K

                                     PART I

ITEMS 1 AND 2.   BUSINESS AND PROPERTIES

BUSINESS ENVIRONMENT

         Northwest Pipeline Corporation ("Pipeline") is a wholly-owned
subsidiary of Williams Gas Pipeline Company LLC ("WGP"). WGP is a wholly-owned
subsidiary of The Williams Companies, Inc. ("Williams").

         Pipeline owns and operates an interstate natural gas pipeline system,
including facilities for mainline transmission and gas storage. Pipeline's
transmission and storage activities are subject to regulation by the Federal
Energy Regulatory Commission ("FERC") under the Natural Gas Act of 1938
("Natural Gas Act") and under the Natural Gas Policy Act of 1978 ("NGPA"), and,
as such, its rates and charges for the transportation of natural gas in
interstate commerce, the extension, enlargement or abandonment of its
jurisdictional facilities, and its accounting, among other things, are subject
to regulation.

         Pipeline has significant future opportunities to provide service to
meet the demands of growing gas markets. Pipeline's geographical position allows
access to the incremental sources of supply required by these markets.

TRANSMISSION

         Pipeline owns and operates a pipeline system for the mainline
transmission of natural gas. This system extends from the San Juan Basin in
northwestern New Mexico and southwestern Colorado through Colorado, Utah,
Wyoming, Idaho, Oregon and Washington to a point on the Canadian border near
Sumas, Washington. At December 31, 2000, Pipeline's system, having an aggregate
mainline deliverability of approximately 2.9 Bcf* of gas per day, was composed
of approximately 3,900 miles of mainline and branch transmission pipelines, and
41 mainline compressor stations with a combined capacity of approximately
317,000 horsepower.

         Pipeline operates under an open-access transportation certificate
wherein gas is transported for third party shippers. In 2000, Pipeline
transported natural gas for a total of 152 customers. Pipeline provides services
for markets in California, New Mexico, Colorado, Utah, Nevada, Wyoming, Idaho,
Oregon and Washington. Transportation customers include distribution companies,
municipalities, interstate and intrastate pipelines, gas marketers and direct
industrial users. The two largest transportation customers of Pipeline in 2000
accounted for approximately 14.6% and 13.6%, respectively, of total operating
revenues. No other customer accounted for more than 10% of total operating
revenues in 2000. Pipeline's firm transportation agreements are generally
long-term agreements with various expiration dates and account for the major
portion of Pipeline's business. Additionally, Pipeline offers interruptible
transportation service under agreements that are generally short term.





* The term "Mcf" means thousand cubic feet, "MMcf" means million cubic feet and
"Bcf" means billion cubic feet. All volumes of natural gas are stated at a
pressure base of 14.73 pounds per square inch absolute at 60 degrees Fahrenheit.
The term "MMBtu" means one million British Thermal Units and "TBtu" means one
trillion British Thermal Units.


<PAGE>   4

         No other interstate natural gas pipeline company presently provides
significant service to Pipeline's primary gas consumer market area. However,
competition with other interstate carriers exists for expansion markets.
Competition also exists with alternate fuels. Electricity and distillate fuel
oil are the primary alternate energy sources in the residential and commercial
markets. In the industrial markets, high sulfur residual fuel oil is the main
alternate fuel source.

         Pipeline believes that strong economies in the Pacific Northwest and
the growing preference for natural gas in response to environmental concerns
support future expansions of its mainline capacity.

GAS STORAGE

         Underground gas storage facilities enable Pipeline to balance daily
receipts and deliveries and provide storage services to certain major customers.

         Pipeline has a contract with a third party, under which gas storage
services are provided to Pipeline in an underground storage reservoir in the
Clay Basin Field located in Daggett County, Utah. Pipeline is authorized to
utilize the Clay Basin Field at a seasonal storage level of 3.04 Bcf of working
gas, with a firm delivery capability of 25.3 MMcf of gas per day.

         Pipeline owns a one-third interest in the Jackson Prairie underground
storage facility located near Chehalis, Washington, with the remaining interests
owned by two of Pipeline's distribution customers. The authorized seasonal
storage capacity of the facility is 18.3 Bcf of working gas. The facility
provides peak day deliveries to Pipeline of up to 850 MMcf per day on a firm
basis and up to an additional 150 MMcf per day on a best-efforts basis.

         Pipeline also owns and operates a liquefied natural gas ("LNG") storage
facility located near Plymouth, Washington, which provides standby service for
Pipeline's customers during extreme peaks in demand. The facility has a total
LNG storage capacity equivalent to 2.285 Bcf of working gas, liquefaction
capability of 12 MMcf per day and regasification capability of 300 MMcf per day.
Certain of Pipeline's major customers own the working gas stored at the LNG
plant.

EXPANSION PROJECTS

         Pipeline has several system expansion and enhancement proposals in
various stages of development, although at the present time, there are no
pending certificate applications for major expansion projects.

OPERATING STATISTICS

         The following table summarizes volumes and capacity for the periods
indicated:

<TABLE>
<CAPTION>
                                                                           Year Ended December 31,

                                                                      2000           1999          1998
                                                                      ----           ----          ----
<S>                                                                   <C>            <C>           <C>
Total throughput (TBtu)...................................             752            708           732

Average Daily Transportation Volumes (TBtu)...............             2.1            1.9           2.0
Average Daily Firm Reserved Capacity (TBtu)...............             2.7            2.5           2.6
</TABLE>

OTHER REGULATORY MATTERS

         Pipeline's transportation of natural gas in interstate commerce is
subject to regulation by the FERC under the Natural Gas Act and the NGPA.
Pipeline holds certificates of public convenience and necessity issued by the
FERC authorizing it to own and operate all pipelines, facilities and properties
considered jurisdictional for which certificates are required under the Natural
Gas Act.


                                      -2 -
<PAGE>   5

         Pipeline is subject to the Natural Gas Pipeline Safety Act of 1968, as
amended by Title I of the Pipeline Safety Act of 1979, which regulates safety
requirements in the design, construction, operation and maintenance of
interstate gas transmission facilities.

         On February 9, 2000, the FERC issued a final rule, Order No. 637, in
response to the comments received on the Notice of Proposed Rulemaking ("NOPR")
and Notice of Inquiry ("NOI"). The FERC adopted in Order No. 637 certain
policies that it found are necessary to adjust its current regulatory model to
the needs of the evolving markets, but determined that any fundamental changes
to its regulatory policy, which changes were raised and commented on in the NOPR
and NOI, would be considered after further study and evaluation of the evolving
marketplace. Most significantly, in Order No. 637, the FERC (i) revised its
pricing policy to waive, for a two-year period, the maximum price ceilings for
short-term releases of capacity of less than one year, and (ii) permitted
pipelines to file proposals to implement seasonal rates for short-term services
and term-differentiated rates, subject to certain requirements including the
requirement that a pipeline be limited to recovering its annual revenue
requirement under those rates.

         On April 1, 1993, Pipeline began collecting new rates, subject to
refund, under its rate case filed October 1, 1992 ("1993 Rate Case"). Pipeline
made refunds to customers in June 1998 totaling $27 million, including interest,
reflecting the FERC's resolution of all disputed matters in this case. Pipeline
and other parties sought judicial review of the FERC's decision concerning rate
of return on equity. One party sought judicial review of the inclusion of unpaid
accruals in rate base. In July 1998, the FERC issued orders concerning its rate
of return on equity policy in rate proceedings of other pipelines adopting a
formula that gives less weight to the long-term growth component. In April 1999,
the Court of Appeals for the D.C. Circuit remanded the 1993 Rate Case to the
FERC for application of its revised rate of return on equity policy. On July 14,
1999, the FERC issued an order requiring Pipeline to: (a) submit a surcharge
plan to the FERC, (b) recalculate rates consistent with the new weighting
formula favoring short term growth, and (c) address in a remand hearing the
appropriate source for Gross Domestic Product ("GDP") growth data. The new
weighting formula generally results in a higher authorized rate of return on
equity. Pipeline and its customers resolved by settlement those issues relating
to long term GDP growth. In February 2000, the FERC approved the long-term
growth settlement and issued an order related to return on equity issues
requiring Pipeline to incorporate the effects of the settlement and to calculate
its allowed rate of return on equity consistent with the recently announced
policy changes in other proceedings. As a part of this recalculation of allowed
return on equity, the FERC provided that Pipeline must use the median instead of
the midpoint of the various results of Discounted Cash Flow ("DCF") analysis for
a proxy group. This results in a 13.67 percent return on equity for Pipeline. On
April 3, 2000, Pipeline made the necessary compliance filings to implement the
FERC's decision including the establishment of surcharges in order to recollect
moneys that shippers owe Pipeline for these corrective actions. During the first
quarter of 2000, Pipeline recorded surcharges of $11.4 million, of which $7
million increased revenues and $4.4 million, representing interest, increased
other income. The results of these adjustments are reflected in the accompanying
statements. On July 14, 2000, the FERC issued an order denying customer
rehearing requests and approving Pipeline's compliance filing. The order
reaffirmed Pipeline's right to use the median result from the DCF proxy group
analysis. The FERC's action resulted in Pipeline's booking $3.2 million of
additional revenues and $2.6 million of interest income in July 2000. Some of
Pipeline's customers have sought judicial review concerning the FERC's orders
with respect to return on equity issues.

        On February 1, 1996, Pipeline began collecting new rates, subject to
refund, under the provisions of its rate case filed August 1, 1995 ("1995 Rate
Case"). On October 18, 1996, the Commission issued an order approving a
settlement concerning certain liquid revenue credit issues relating to
Pipeline's agreement with an affiliate to have liquid hydrocarbon products
extracted from Pipeline's transportation stream at Ignacio, Colorado. The
litigation of all remaining issues took place in late 1996. Pipeline's rate
application sought a revenue increase for increases in rate base related
primarily to the Northwest Natural and Expansion II facilities placed into
service December 1, 1995 and increased operating costs primarily associated with
an increase in headquarters office rent. During the first quarter of 1998, the
ALJ issued an Initial Decision. The ALJ found that the facts of this case
continue to support Pipeline's capital structure of 55% equity and 45% debt. The
ALJ also determined that Pipeline fits within the average risk range for
determining pipeline return on equity and allowed a return on equity of 11.2
percent. On June 1, 1999, the FERC issued its order affirming many aspects of
the ALJ's initial decision, but finding that the return on equity issue should
be resolved by using the FERC's new policy concerning rate of return
determinations. This resulted in an allowed return on equity of 12.22 percent.
During the second quarter of 1999, Pipeline reduced its rate refund liabilities
$9.9 million, of which $7.7 million increased revenues


                                      -3-
<PAGE>   6

and $2.2 million reduced interest expense, to reflect the FERC's action in this
proceeding. On September 29, 2000, the FERC issued its Order on Rehearing,
which, for the most part, reaffirmed the FERC's earlier June 1, 1999 decision.
Pipeline made a compliance filing on October 16, 2000. Upon approval, Pipeline
will issue appropriate refunds to its customers, and does not anticipate other
changes to current rate refund liabilities related to this rate case.

         On March 1, 1997, Pipeline began collecting new rates, subject to
refund, under the provisions of its rate case filed August 30, 1996 ("1996 Rate
Case"). The application sought an increase in rates due to a proposed use of a
higher depreciation rate which also considers a net negative salvage value for
Pipeline's facilities, higher operating costs and a redesign of Pipeline's rates
because of impacts relating to the sale of Pipeline's south-end facilities in
the third quarter of 1996. On July 22, 1997, Pipeline filed a settlement to
resolve all issues in this rate case. On November 25, 1997, the FERC, over the
objection of one dissenting party, issued an order approving all aspects of the
settlement. The one dissenting party sought and was denied rehearing of the
FERC's order. That party sought judicial review of certain aspects of the FERC's
decision. Pipeline made refunds to customers in August 1998 totaling $16.7
million, including interest, in this rate case. A settlement was reached with
the one dissenting party on issues pending review in the proceeding and on other
business related issues. The settlement with the one dissenting party had no
impact on Pipeline's financial position or results of operations. All remaining
judicial challenges in this matter were withdrawn in the third quarter of 2000.

OWNERSHIP OF PROPERTY

         Pipeline's system is owned in fee. However, a substantial portion of
Pipeline's system is constructed and maintained pursuant to rights-of-way,
easements, permits, licenses or consents on and across properties owned by
others. The compressor stations of Pipeline, with appurtenant facilities, are
located in whole or in part upon lands owned by Pipeline and upon sites held
under leases or permits issued or approved by public authorities. The LNG plant
is located on lands owned in fee by Pipeline. Pipeline's debt indentures
restrict the sale or disposal of a major portion of its pipeline system.

EMPLOYEES

         At December 31, 2000, Pipeline employed 532 persons, none of whom are
represented under collective bargaining agreements. No strike or work stoppage
in any of Pipeline's operations has occurred in the past and relations with
employees are good.

ENVIRONMENTAL MATTERS

         Pipeline is subject to the National Environmental Policy Act and other
federal and state legislation regulating the environmental aspects of its
business. Management believes that Pipeline is in substantial compliance with
existing environmental requirements. Pipeline believes that, with respect to any
capital expenditures required to meet applicable standards and regulations, the
FERC would grant the requisite rate relief so that, for the most part, such
expenditures and a return thereon would be permitted to be recovered. Pipeline
believes that compliance with applicable environmental requirements is not
likely to have a material effect upon Pipeline's earnings or competitive
position.

FORWARD-LOOKING INFORMATION

         Certain matters discussed in this report, excluding historical
information, include forward-looking statements. Although Pipeline believes such
forward-looking statements are based on reasonable assumptions, no assurance can
be given that every objective will be reached. Such statements are made in
reliance on the "safe harbor" protections provided under the Private Securities
Litigation Reform Act of 1995.

         As required by such Act, Pipeline hereby identifies the following
important factors that could cause actual results to differ materially from any
results projected, forecasted, estimated or budgeted by Pipeline in
forward-looking statements: (i) risks and uncertainties related to changes in
general economic conditions in the United States, changes in laws and
regulations to which Pipeline is subject, including tax, environmental and
employment laws and regulations, the cost and effects of legal and
administrative claims and proceedings against Pipeline or its subsidiary or
which may be brought against Pipeline or its subsidiary, the effect of changes
in accounting policies, and conditions of the capital markets Pipeline utilizes
to access capital to finance operations; (ii) risks and uncertainties related to
the


                                      -4-
<PAGE>   7
impact of future federal and state regulation of business activities, including
allowed rates of return and the resolution of other regulatory matters discussed
herein; (iii) risks and uncertainties related to the ability to develop expanded
markets as well as the ability to maintain existing markets; and (iv) risks and
uncertainties related to the ability to control costs. In addition, future
utilization of pipeline capacity will depend on energy prices, competition from
other pipelines and alternate fuels, the general level of natural gas demand,
decisions by customers not to renew expiring natural gas transportation
contracts and weather conditions, among other things.

ITEM 3.  LEGAL PROCEEDINGS

         Other than as described in Note 9 of Notes to Financial Statements and
above under Items 1 and 2 - Business and Properties, there are no material
pending legal proceedings. Pipeline is subject to ordinary routine litigation
incidental to its business.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Since Pipeline meets the conditions set forth in General Instruction
(I)(1)(a) and (b) of Form 10-K, this information is omitted.


                                      -5-
<PAGE>   8
                                     PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Pipeline is wholly-owned by WGP, a wholly-owned subsidiary of Williams.

         The payment of dividends by Pipeline on its common stock is restricted
under various debt agreements. Under the most restrictive provisions, the amount
of Pipeline's retained earnings available for dividends on its common stock as
of December 31, 2000, was approximately $191.8 million. In 2000 and 1999,
Pipeline paid cash dividends on common stock of $80 million and $56 million,
respectively.

ITEM 6.  SELECTED FINANCIAL DATA

         Since Pipeline meets the conditions set forth in General Instruction
(I)(1)(a) and (b) of Form 10-K, this information is omitted.

ITEM 7.  MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS

         This analysis discusses financial results of Pipeline's operations for
the years 1998 through 2000. Variances due to changes in price and volume have
little impact on revenues, because under Pipeline's rate design methodology, the
majority of overall cost of service is recovered through firm capacity
reservation charges in its transportation rates.

RESULTS OF OPERATIONS

Year Ended December 31, 2000 vs. Year Ended December 31, 1999

         Operating revenues increased $8.6 million, or 3%, due primarily to the
recognition of a $10.2 million surcharge resulting from a favorable FERC
decision on return on equity related to the 1993 rate case, a $3.5 million
increase in other revenues associated with full year operation of the Columbia
Gorge project placed into service in November 1999 and higher short-term firm
and interruptible transportation revenues, partially offset by a 1999 reduction
to rate refund liabilities of $8.3 million associated with the 1995 rate case.

         Pipeline's transportation service accounted for 94% and 95% of
operating revenues for the years ended December 31, 2000 and 1999, respectively.
Additionally, 3% and 2% of operating revenues represented gas storage service
for the years ended December 31, 2000 and 1999, respectively.

         Operating expenses increased $2.1 million, or 1%, due primarily to
higher depreciation in 2000 coupled with a 1999 $2.1 million reduction to
depreciation associated with the 1995 rate case and a 1999 $1.4 million
reduction to liability reserves for sales and use tax audits resulting from a
favorable ALJ decision, partially offset by the receipt in 2000 of $2.1 million
in environmental liability insurance settlements, lower 2000 retirement plan
contributions and a 1999 adjustment to expense of $1.2 million for software
reengineering, training and other costs previously capitalized.

         Operating income increased $6.5 million, or 5%, due to the reasons
identified above.

         Other income increased $8 million primarily resulting from $7 million
of interest on the 1993 rate case surcharge revenues discussed above in
operating revenues.

         Other interest expense increased $2.1 million due primarily to the 1999
reduction to accrued interest liabilities of $2.2 million associated with the
1995 rate case.

Year Ended December 31, 1999 vs. Year Ended December 31, 1998

         Operating revenues increased $.4 million due primarily to the 1999
reductions to rate refund liabilities of $8.3 million associated with the 1995
rate case and a $1.4 million gain on the sale of gas from Jackson Prairie,
mostly offset by lower short-term firm and interruptible transportation
revenues, reductions in 1998 of a demand charge credit reserve of $1.2 million
and rate refund liabilities of $4.2 million


                                      -6-
<PAGE>   9
associated with the 1993 and 1996 rate cases and a gain in 1998 of $.4 million
on the sale of system balancing gas.

         Pipeline's transportation service accounted for 95% of operating
revenues for each of the years ended December 31, 1999 and 1998. Additionally,
gas storage service represented 2% and 3% of operating revenues for the years
ended December 31, 1999 and 1998, respectively.

         Operating expenses decreased $4.6 million, or 3%, primarily due to a
$2.1 million reduction to depreciation associated with the 1995 rate case, a
$1.4 million reduction to liability reserves for sales and use tax audits
resulting from a favorable ALJ decision, the 1998 increase to property damage
reserves of $1.2 million, and the 1998 modification of an employee benefit
program associated with the vesting of paid time off of $3 million, partially
offset by $1.2 million of software reengineering, training and other costs
previously capitalized, a $2.6 million increase in depreciation resulting
primarily from additions of short-lived property and accruals for damages of
$2.3 million associated with 1999 pipeline ruptures.

         Operating income increased $5 million, or 4%, due to reasons identified
above.

         Interest on long-term debt decreased $3 million as a result of the
early retirement of the remaining $34 million owed on the 10.65% Debentures in
November of 1998. Other interest expense decreased $4.3 million due to the
reduction to accrued interest liabilities of $2.2 million associated with the
1995 rate case and lower revenues subject to refund as a result of lower rate
refund liabilities.

FINANCIAL CONDITION AND LIQUIDITY

Capital Expenditures and Financing

         Pipeline's expenditures for property, plant and equipment additions
amounted to $47.9 million, $65.6 million and $60.1 million for 2000, 1999 and
1998, respectively. Funds necessary to complete capital projects are expected to
come from several sources, including Pipeline's operations and available cash.
In addition, Pipeline expects to be able to obtain financing, when necessary, on
reasonable terms. To allow flexibility in the timing of issuance of long-term
securities, financing may be provided on an interim basis with bank debt and
from sources discussed below.

         As a participant in Williams' cash management program, Pipeline has
advances to and from Williams through Pipeline's parent company, WGP. The
advances are represented by demand notes. The interest rate on intercompany
demand notes is the London Interbank Offered Rate ("LIBOR") on the first day of
the month plus an applicable margin based on the current Standard and Poor's
Rating of Pipeline.

         Pipeline has an outstanding registration statement filed with the
Securities and Exchange Commission. At March 1, 2001, approximately $150 million
of shelf availability remains under this outstanding registration statement and
may be used to issue debt securities. Interest rates and market conditions will
affect amounts borrowed, if any, under this arrangement.

         Pipeline is a participant in a $700 million Revolving Credit Facility
with Williams and certain affiliated companies. Pipeline's maximum borrowing
availability, subject to prior borrowing by other affiliated companies, is $400
million, none of which was used by Pipeline at December 31, 2000. Interest rates
vary with current market conditions based on the base rate of Citibank N.A.,
federal funds rate or LIBOR. The Facility contains restrictions, which limit,
under certain circumstances, the issuance of additional debt, the attachment of
liens on any assets and any change of ownership of Pipeline. Any borrowings by
Pipeline under this Facility are not guaranteed by Williams and are based on
Pipeline's financial need and credit worthiness.

         Pipeline has an agreement to sell, on an ongoing basis, certain of its
accounts receivable to a special-purpose entity ("SPE"). At December 31, 2000,
Pipeline sold $15 million of its accounts receivable in exchange for $15 million
in cash. For 2000, cash inflows from the SPE were approximately $130 million.
The sales of these receivables resulted in a net charge to results of operations
of approximately $.7 million and $.6 million in 2000 and 1999, respectively.


                                      -7-
<PAGE>   10

OTHER

         Pipeline believes that strong economies in the Pacific Northwest and
the growing preference for natural gas in response to environmental concerns
support future expansions of its mainline capacity.

         Refer to Items 1 and 2 Business and Properties for information about
regulation of Pipeline's business. See Note 2 of Notes to Financial Statements
for fair value of financial instruments.

Contingencies

         Reference is made to Note 9 of Notes to Financial Statements for
information about regulatory, judicial and business developments which cause
operating and financial uncertainties.

Effect of Inflation

         Pipeline generally has experienced increased costs in recent years due
to the effect of inflation on the cost of labor, materials and supplies, and
property, plant and equipment. A portion of the increased labor and materials
and supplies cost can directly affect income through increased maintenance and
operating costs. The cumulative impact of inflation over a number of years has
resulted in increased costs for current replacement of productive facilities.
The majority of Pipeline's property, plant and equipment and inventory is
subject to rate-making treatment, and under current FERC practices, recovery is
limited to historical costs. While amounts in excess of historical cost are not
recoverable under current FERC practices, Pipeline believes it will be allowed
to recover and earn a return based on increased actual cost incurred when
existing facilities are replaced. Cost-based regulation along with competition
and other market factors limit Pipeline's ability to price services or products
based upon inflation's effect on costs.

MARKET RISK DISCLOSURES

Interest Rate Risk

         Pipeline's interest rate risk exposure primarily results from its debt
portfolio, which is influenced by short-term rates, primarily LIBOR based
borrowings from commercial banks and long-term U.S. Treasury rates. To mitigate
the impact of fluctuations in interest rates, Pipeline targets to maintain a
significant portion of its debt portfolio in fixed rate debt. At December 31,
2000, the amount of Pipeline's fixed and variable rate debt was at targeted
levels. Pipeline has traditionally maintained an investment grade credit rating
as one aspect of managing its interest rate risk. In order to fund its 2001
capital expenditure plan, Pipeline may need to access various sources of
liquidity, which may include traditional borrowing.

         The following table provides information as of December 31, 2000, about
Pipeline's long-term debt that is subject to interest rate risk. The table
presents principal cash flows and weighted average interest rates by expected
maturity dates.

<TABLE>
<CAPTION>
                                                         December 31, 2000
                                                       (Millions of Dollars)

                                  2001      2002      2003      2004      2005   Thereafter  Total  Fair Value
                                  ----      ----      ----      ----      ----   ----------  -----  ----------
<S>                              <C>       <C>       <C>       <C>       <C>     <C>         <C>    <C>
Long-term debt,
including current portion:

Fixed rate                           --        --    $  7.5    $  7.5    $  7.5    $345.0    $367.5   $366.0

Interest rate                       7.0%      7.0%      6.9%      6.9%      6.8%      6.8%       --       --

Variable rate                    $  1.7    $  1.6        --        --        --        --    $  3.3   $  3.4

Interest rate (1)
</TABLE>


(1) The interest rate on these notes will be adjusted periodically based on a
calculation using the United States Treasury Rate, but will never exceed 25% or
be less than 9% per annum. The interest rate at December 31, 2000 was 9%.


                                      -8-
<PAGE>   11

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
<S>                                                                       <C>
Report of independent auditors............................................. 10

Covered by report of independent auditors:

     Statement of income for the years ended
           December 31, 2000, 1999 and 1998................................ 11

     Balance sheet at December 31, 2000 and 1999........................... 12

     Statement of cash flows for the years ended
           December 31, 2000, 1999 and 1998................................ 14

     Statement of capitalization for the years ended
           December 31, 2000, 1999 and 1998................................ 15

     Notes to financial statements......................................... 16

Not covered by report of independent auditors:

     Quarterly financial data (unaudited).................................. 26
</TABLE>





           All schedules have been omitted since the required information is not
present or is not present in amounts sufficient to require submission of the
schedule or because the information required is included in the financial
statements and notes thereto.


                                      -9-
<PAGE>   12

                         REPORT OF INDEPENDENT AUDITORS




The Board of Directors
Northwest Pipeline Corporation


           We have audited the accompanying balance sheet of Northwest Pipeline
Corporation as of December 31, 2000 and 1999, and the related statements of
income, cash flows, and capitalization for each of the three years in the period
ended December 31, 2000. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

           We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

           In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Northwest Pipeline
Corporation at December 31, 2000 and 1999, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
2000, in conformity with accounting principles generally accepted in the United
States.





                                                           /s/ ERNST & YOUNG LLP

Tulsa, Oklahoma
February 19, 2001


                                      -10-
<PAGE>   13

                         NORTHWEST PIPELINE CORPORATION

                               STATEMENT OF INCOME

================================================================================

<TABLE>
<CAPTION>
                                                Year Ended December 31,
                                          -----------------------------------
                                            2000         1999          1998
                                          --------     --------      --------
                                              (Thousands of Dollars)
<S>                                       <C>          <C>          <C>
OPERATING REVENUES .....................   $ 296,361    $ 287,793    $ 287,390
                                           ---------    ---------    ---------

OPERATING EXPENSES:
   General and administrative ..........      39,912       43,441       47,283
   Operation and maintenance ...........      36,666       37,784       38,156
   Depreciation ........................      56,558       51,444       50,957
   Taxes, other than income taxes ......      13,363       11,777       12,610
                                           ---------    ---------    ---------

                                             146,499      144,446      149,006
                                           ---------    ---------    ---------

      Operating income .................     149,862      143,347      138,384
                                           ---------    ---------    ---------

OTHER INCOME - net .....................      10,656        2,657        3,722
                                           ---------    ---------    ---------

INTEREST CHARGES:
   Interest on long-term debt ..........      25,914       26,064       29,064
   Other interest ......................       6,273        4,185        8,496
   Allowance for borrowed funds used
      during construction ..............        (273)        (833)        (520)
                                           ---------    ---------    ---------
                                              31,914       29,416       37,040
                                           ---------    ---------    ---------


INCOME  BEFORE INCOME TAXES ............     128,604      116,588      105,066

PROVISION FOR INCOME TAXES .............      48,862       43,575       41,030
                                           ---------    ---------    ---------

NET INCOME .............................   $  79,742    $  73,013    $  64,036
                                           =========    =========    =========

CASH DIVIDENDS ON COMMON STOCK .........   $  80,000    $  56,000    $  36,000
                                           =========    =========    =========
</TABLE>


See accompanying notes.


                                      -11-
<PAGE>   14

                         NORTHWEST PIPELINE CORPORATION

                                  BALANCE SHEET

================================================================================

                                     ASSETS


<TABLE>
<CAPTION>
                                                                              December 31,
                                                                         -----------------------
                                                                           2000        1999
                                                                         ----------   ----------
                                                                          (Thousands of Dollars)

<S>                                                                      <C>          <C>
PROPERTY, PLANT AND EQUIPMENT, at cost ...............................   $1,678,814   $1,616,904
    Less - Accumulated depreciation ..................................      758,375      701,127
                                                                         ----------   ----------

                                                                            920,439      915,777

    Construction work in progress ....................................       13,121       26,900
                                                                         ----------   ----------

                                                                            933,560      942,677
                                                                         ----------   ----------

CURRENT ASSETS:
    Cash and cash equivalents ........................................        1,890          342
    Advances to affiliates ...........................................       53,882       30,842
    Accounts receivable -
       Trade .........................................................       12,227       17,748
       Affiliated companies ..........................................        3,149        2,027
    Materials and supplies (principally at lower of average cost or
     market) .........................................................       10,798       10,734
    Exchange gas due from others .....................................       28,371        6,337
    Deferred income taxes ............................................        2,244       19,741
    Prepayments and other ............................................        9,238        2,725
                                                                         ----------   ----------

                                                                            121,799       90,496
                                                                         ----------   ----------

OTHER ASSETS:
    Deferred charges .................................................       48,720       47,594
                                                                         ----------   ----------

                                                                         $1,104,079   $1,080,767
                                                                         ==========   ==========
</TABLE>


See accompanying notes.


                                      -12-
<PAGE>   15


                         NORTHWEST PIPELINE CORPORATION

                                  BALANCE SHEET

================================================================================

                      LIABILITIES AND STOCKHOLDER'S EQUITY


<TABLE>
<CAPTION>
                                                                         December 31,
                                                                    -----------------------
                                                                       2000         1999
                                                                    ----------   ----------
                                                                    (Thousands of Dollars)
<S>                                                                 <C>          <C>
CAPITALIZATION:
    Common stockholder's equity -
       Common stock, par value $1 per share; authorized
          and outstanding, 1,000 shares .........................   $        1   $        1
       Additional paid-in capital ...............................      262,844      262,844
       Retained earnings ........................................      206,536      206,794
                                                                    ----------   ----------

                                                                       469,381      469,639

    Long-term debt, less current maturities .....................      369,146      370,793
                                                                    ----------   ----------

                                                                       838,527      840,432
                                                                    ----------   ----------

CURRENT LIABILITIES:
    Current maturities of long-term debt ........................        1,667        1,667
    Accounts payable -
       Trade ....................................................       12,729       10,289
       Affiliated companies .....................................        6,351        2,238
    Accrued liabilities -
       Income taxes due to affiliate ............................        8,067        8,546
       Taxes, other than income taxes ...........................        2,701        2,400
       Interest .................................................       15,310       12,030
       Employee costs ...........................................        9,512       11,413
       Exchange gas due to others ...............................       35,475        8,612
       Reserves for estimated rate refunds ......................       16,198       29,059
       Other ....................................................        2,029        2,001
                                                                    ----------   ----------

                                                                       110,039       88,255
                                                                    ----------   ----------

DEFERRED INCOME TAXES ...........................................      149,072      143,519
                                                                    ----------   ----------

OTHER DEFERRED CREDITS ..........................................        6,441        8,561
                                                                    ----------   ----------

CONTINGENT LIABILITIES AND COMMITMENTS
                                                                    ----------   ----------

                                                                    $1,104,079   $1,080,767
                                                                    ==========   ==========
</TABLE>


See accompanying notes.


                                      -13-


<PAGE>   16


                         NORTHWEST PIPELINE CORPORATION

                             STATEMENT OF CASH FLOWS

================================================================================

<TABLE>
<CAPTION>

                                                                         Year Ended December 31,
                                                                 -----------------------------------------
                                                                   2000            1999            1998
                                                                 ---------       ---------       ---------
                                                                          (Thousands of Dollars)
<S>                                                              <C>             <C>             <C>
OPERATING ACTIVITIES:
   Net Income .................................................  $  79,742       $  73,013       $  64,036
   Adjustments to reconcile to cash provided by operations-
      Depreciation ............................................     56,558          51,444          50,957
      Provision for deferred income taxes .....................     23,050           8,119          14,725
      Amortization of deferred charges and credits ............      1,111           2,112           1,908
      Sale of receivables .....................................      5,000              --              --
      Allowance for equity funds used during construction .....       (496)         (1,475)           (813)
      Changes in:
         Accounts receivable and exchange gas due from
           Others .............................................    (22,635)         13,098           1,190
         Materials and supplies ...............................        (64)           (159)             44
         Other current assets .................................     (6,513)           (962)          6,332
         Other assets and deferred charges ....................     (4,124)          2,075            (124)
         Accounts payable, income taxes due to
           affiliate and exchange gas due to others ...........     27,242         (11,584)         (8,225)
         Other accrued liabilities ............................     (3,086)         (8,838)        (46,420)
         Other deferred credits ...............................       (213)           (518)          3,312
      Other ...................................................         --               3              (7)
                                                                 ---------       ---------       ---------

   Net cash provided by operating activities ..................    155,572         126,328          86,915
                                                                 ---------       ---------       ---------

INVESTING ACTIVITIES:
   Property, plant and equipment -
      Capital expenditures ....................................    (47,933)        (65,642)        (60,102)
      Proceeds from sales .....................................        988              --           1,455
      Asset removal cost ......................................         --             (45)             --
      Changes in accounts payable .............................     (2,372)            312             878
   Payments from (advances to) affiliates .....................    (23,040)         (4,108)         45,089
                                                                 ---------       ---------       ---------

   Net cash used by investing activities ......................    (72,357)        (69,483)        (12,680)
                                                                 ---------       ---------       ---------

FINANCING ACTIVITIES:
   Principal payments on long-term debt .......................     (1,667)         (1,667)        (35,847)
   Premium on early retirement of long-term debt ..............         --              --          (1,851)
   Dividends paid .............................................    (80,000)        (56,000)        (36,000)
                                                                 ---------       ---------       ---------

   Net cash used by financing activities ......................    (81,667)        (57,667)        (73,698)
                                                                 ---------       ---------       ---------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ..........      1,548            (822)            537

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ................        342           1,164             627
                                                                 ---------       ---------       ---------

CASH AND CASH EQUIVALENTS AT END OF YEAR ......................  $   1,890       $     342       $   1,164
                                                                 =========       =========       =========
</TABLE>


See accompanying notes.

                                      -14-

<PAGE>   17


                         NORTHWEST PIPELINE CORPORATION

                           STATEMENT OF CAPITALIZATION

================================================================================

<TABLE>
<CAPTION>


                                                                Year Ended December 31,
                                                        -----------------------------------------
                                                          2000            1999            1998
                                                        ---------       ---------       ---------
                                                                 (Thousands of Dollars)
<S>                                                     <C>             <C>             <C>
COMMON STOCKHOLDER'S EQUITY:
   Common stock, par value $1 per share,
      Authorized and outstanding, 1,000 shares ...      $       1       $       1       $       1
                                                        ---------       ---------       ---------

   Additional paid-in capital -
         Balance at beginning and end of period ..        262,844         262,844         262,844
                                                        ---------       ---------       ---------

   Retained earnings -
      Balance at beginning of period .............        206,794         190,507         162,617
         Net income ..............................         79,742          73,013          64,036
         Cash dividends ..........................        (80,000)        (56,000)        (36,000)
         Noncash dividend ........................             --            (726)           (146)
                                                        ---------       ---------       ---------

      Balance at end of period ...................        206,536         206,794         190,507
                                                        ---------       ---------       ---------

         Total common stockholder's equity .......        469,381         469,639         453,352
                                                        ---------       ---------       ---------

LONG-TERM DEBT:
   Debentures -
      6.625%, payable 2007 .......................        250,000         250,000         250,000
      7.125%, payable 2025 .......................         84,718          84,706          84,695
      9%, payable 2003 through 2007 ..............         32,766          32,758          32,749
   Adjustable rate notes, payable through 2002 ...          1,662           3,329           4,996
                                                        ---------       ---------       ---------

         Total long-term debt ....................        369,146         370,793         372,440
                                                        ---------       ---------       ---------

         Total capitalization ....................      $ 838,527       $ 840,432       $ 825,792
                                                        =========       =========       =========
</TABLE>


See accompanying notes.

                                      -15-

<PAGE>   18



                         NORTHWEST PIPELINE CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

================================================================================

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Corporate Structure and Control

         Northwest Pipeline Corporation ("Pipeline") is a wholly-owned
subsidiary of Williams Gas Pipeline Company LLC ("WGP"). WGP is a wholly owned
subsidiary of The Williams Companies, Inc. ("Williams").

Nature of Operations

         Pipeline owns and operates a pipeline system for the mainline
transmission of natural gas. This system extends from the San Juan Basin in
northwestern New Mexico and southwestern Colorado through Colorado, Utah,
Wyoming, Idaho, Oregon and Washington to a point on the Canadian border near
Sumas, Washington.

Basis of Presentation

         Pipeline's 1983 acquisition by Williams has been accounted for using
the purchase method of accounting. Accordingly, an allocation of the purchase
price was assigned to the assets and liabilities of Pipeline, based on their
estimated fair values at the time of the acquisition. Williams has not pushed
down the purchase price allocation (amounts in excess of original cost) of $97.5
million, as of December 31, 2000, to Pipeline as current Federal Energy
Regulatory Commission ("FERC") policy does not permit Pipeline to recover
through its rates amounts in excess of original cost. The accompanying financial
statements reflect Pipeline's original basis in its assets and liabilities.

Use of Estimates

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

Property, Plant and Equipment

         Property, plant and equipment ("plant"), consisting principally of
natural gas transmission facilities, is recorded at original cost. Expenditures
which materially increase values or capacities or extend useful lives of plant
are capitalized. Routine maintenance, repairs and renewal costs are charged to
income as incurred. Gains or losses from the ordinary sale or retirement of
plant are charged or credited to accumulated depreciation.

         Depreciation is provided by the straight-line method for utility plant.
The annual weighted average composite depreciation rate recorded for
transmission and storage plant was 3.16%, 2.88% and 3.03% for 2000, 1999 and
1998, respectively, including an allowance for negative salvage.

Allowance for Borrowed and Equity Funds Used During Construction

         Allowance for funds used during construction ("AFUDC") represents the
estimated cost of borrowed and equity funds applicable to utility plant in
process of construction. Recognition is made of this item as a cost of utility
plant because it constitutes an actual cost of construction under established
regulatory practices. The FERC has prescribed a formula to be used in computing
separate allowances for borrowed and equity AFUDC.

         The composite rate used to capitalize AFUDC was approximately 9.9%,
9.9% and 9.7% for 2000, 1999 and 1998, respectively. Equity AFUDC of $.5
million, $1.5 million and $.8 million for 2000, 1999 and 1998, respectively, is
reflected in other income.

                                      -16-


<PAGE>   19


                         NORTHWEST PIPELINE CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

================================================================================

Income Taxes

         Pipeline is included in Williams' consolidated federal income tax
return. Pipeline's federal income tax provisions are computed as though separate
tax returns are filed. Deferred income taxes are computed using the liability
method and are provided on all temporary differences between the financial basis
and the tax basis of Pipeline's assets and liabilities.

Deferred Charges

         Pipeline amortizes deferred charges over varying periods consistent
with the FERC approved accounting treatment for such deferred items. Unamortized
debt expense, debt discount and gains or losses on reacquired long-term debt are
amortized by the bonds outstanding method over the related debt repayment
periods.

Cash and Cash Equivalents

         Cash and cash equivalents include demand and time deposits,
certificates of deposit and other marketable securities with a term to maturity
of three months or less when acquired.

Exchange Gas Imbalances

         In the course of providing transportation services to customers,
Pipeline may receive different quantities of gas from shippers than the
quantities delivered on behalf of those shippers. These transactions result in
imbalances, which are typically settled through the receipt or delivery of gas
in the future. Customer imbalances to be repaid or recovered in-kind are
recorded as exchange gas due from others or due to others in the accompanying
balance sheets. These imbalances are valued at the average of the spot market
rates at the Canadian border and the Rocky Mountain market as published in
"Inside FERC's Gas Market Report." Settlement of imbalances requires agreement
between the pipelines and shippers as to allocations of volumes to specific
transportation contracts and timing of delivery of gas based on operational
conditions.

Revenue Recognition

         Revenues from the transportation of gas are recognized based on
contractual terms and the related transported volumes. Pipeline is subject to
FERC regulations and, accordingly, certain revenues collected may be subject to
possible refunds upon final orders in pending rate cases. Pipeline records rate
refund liabilities considering Pipeline and other third party regulatory
proceedings, advice of counsel and estimated total exposure, as discounted and
risk weighted, as well as collection and other risks.

Environmental Matters

         Pipeline is subject to Federal, state, and local environmental laws and
regulations. Environmental expenditures are expensed or capitalized depending on
their future economic benefit and potential for rate recovery. Pipeline believes
that, with respect to any expenditures required to meet applicable standards and
regulations, the FERC would grant the requisite rate relief so that, for the
most part, such expenditures would be permitted to be recovered. Pipeline
believes that compliance with applicable environmental requirements is not
likely to have a material effect upon Pipeline's financial position.

Interest Payments

         Cash payments for interest were $25.7 million, $25.3 million and $29
million, net of $.3 million, $.8 million and $.5 million of interest capitalized
in 2000, 1999 and 1998, respectively.

Stock-Based Compensation

         Williams' employee stock-based awards are accounted for under
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees" and related interpretations.

                                      -17-

<PAGE>   20



                         NORTHWEST PIPELINE CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


================================================================================
Williams' fixed plan common stock options generally do not result in
compensation expense, because the exercise price of the stock options equals the
market price of the underlying stock on the date of grant.

Adoption of Accounting Standards

         In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This was followed in June 2000
by the issuance of SFAS No. 138, "Accounting for Certain Derivative Instruments
and Certain Hedging Activities," which amends SFAS No. 133. SFAS No. 133 and No.
138 establish accounting and reporting standards for derivative financial
instruments. The standards require that all derivative financial instruments be
recorded on the balance sheet at their fair value. Changes in the fair value of
derivatives will be recorded each period in earnings if the derivative is not a
hedge. If a derivative is a hedge, changes in the fair value of the derivative
will either be recognized in earnings along with the change in the fair value of
the hedged asset, liability or firm commitment also recognized in earnings or
recognized in other comprehensive income until the hedged item is recognized in
earnings. For a derivative recognized in other comprehensive income, the
ineffective portion of the derivative's change in fair value will be recognized
immediately in earnings. Pipeline adopted these standards effective January 1,
2001. The adoption of these standards had no impact on Pipeline's financial
position or results of operations.

         The FASB issued SFAS No. 140, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities." The Statement provides
guidance for determining whether a transfer of financial assets should be
accounted for as a sale or a secured borrowing, and whether a liability has been
extinguished. The Statement is effective for recognition and reclassification of
collateral and for disclosures which relate to securitization transactions and
collateral for fiscal years ending after December 15, 2000. The Statement will
become effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001. The initial
application of SFAS No. 140 will not have a material impact to Pipeline's
results of operations and financial position.

         The FASB issued Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation." This interpretation modified the
practice of accounting for certain stock award agreements and was generally
effective beginning July 1, 2000. The initial impact of this interpretation on
Pipeline's results of operations and financial position was not material.

Reclassifications

         Certain reclassifications have been made in the 1999 and 1998 financial
statements to conform to the 2000 presentation.

(2)      DISCLOSURES ABOUT THE 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, cash equivalents and advances to affiliate - The carrying amounts of these
items are assumed to be indicative of their fair value.

Long-term debt - The fair value of Pipeline's publicly traded long-term debt is
valued using year-end traded market prices. Private debt is valued based on the
prices of similar securities with similar terms and credit ratings. Pipeline
used the expertise of an outside investment-banking firm to estimate the fair
value of long-term debt.

         The carrying amount and estimated fair value of Pipeline's long term
debt, including current maturities, were $371 million and $369 million,
respectively, at December 31, 2000, and $372 million and $352 million,
respectively, at December 31, 1999.

                                      -18-

<PAGE>   21



                         NORTHWEST PIPELINE CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

================================================================================


(3)      CONCENTRATION OF OFF-BALANCE-SHEET AND OTHER CREDIT RISK

         During some or all of the periods presented, more than 10% of
Pipeline's operating revenues were generated from each of the following
customers.

<TABLE>
<CAPTION>

                                        Year Ended December 31,
                                    ---------------------------------
                                     2000         1999         1998
                                    -------      -------      -------
                                        (Thousands of Dollars)
<S>                                 <C>          <C>          <C>
Puget Sound Energy, Inc.            $43,368      $43,762      $42,565
Northwest Natural Gas Co.            40,376       39,064       40,557
</TABLE>

         Pipeline's major customers are located in the Pacific Northwest. As a
general policy, collateral is not required for receivables, but customers'
financial condition and credit worthiness are regularly evaluated and historical
losses have been minimal. A portion of the revenues reflected above may be
subject to refund due to Pipeline's pending rate cases as discussed in Note 9.

         Pipeline has an agreement to sell, on an ongoing basis, certain of its
accounts receivable to a special-purpose entity ("SPE"). At December 31, 2000,
Pipeline sold $15 million of its accounts receivable in exchange for $15 million
in cash. For 2000, cash inflows from the SPE were approximately $130 million.
The sales of these receivables resulted in a net charge to results of operations
of approximately $.7 million and $.6 million in 2000 and 1999, respectively.

(4)      INCOME TAXES

         Significant components of the deferred tax liabilities and assets are
as follows:

<TABLE>
<CAPTION>

                                                                     December 31,
                                                                ----------------------
                                                                (Thousands of Dollars)

                                                                  2000          1999
                                                                --------      --------
<S>                                                             <C>           <C>
            Property, plant and equipment                       $142,230      $139,070
            Regulatory assets                                      5,431         5,515
            Loss on reacquired debt                                8,294         9,227
            Other - net                                              534           628
                                                                --------      --------
            Deferred tax liabilities                             156,489       154,440
                                                                --------      --------
            Rate refunds                                              --        17,688
            Regulatory liabilities                                 3,305         2,209
            Accrued liabilities                                    6,356         7,596
            Contributions in aid of construction                      --         3,169
                                                                --------      --------
            Deferred tax assets                                    9,661        30,662
                                                                --------      --------
            Net deferred tax liabilities                        $146,828      $123,778
                                                                ========      ========
            Reflected as:
              Deferred income taxes - current asset             $  2,244      $ 19,741
              Deferred income taxes - noncurrent liability       149,072       143,519
                                                                --------      --------
                                                                $146,828      $123,778
                                                                ========      ========
</TABLE>


                                      -19-

<PAGE>   22



         The provision for income taxes includes:

<TABLE>
<CAPTION>


                                       Year Ended December 31,
                                   ---------------------------------
                                    2000         1999         1998
                                   -------      -------      -------
                                      (Thousands of Dollars)
<S>                                <C>          <C>          <C>
         Current:
            Federal .........      $23,150      $31,804      $22,480
            State ...........        2,662        3,652        3,825
                                   -------      -------      -------
                                    25,812       35,456       26,305
                                   -------      -------      -------

         Deferred:
            Federal .........       20,598        7,255       13,159
            State ...........        2,452          864        1,566
                                   -------      -------      -------
                                    23,050        8,119       14,725
                                   -------      -------      -------

         Total provision ....      $48,862      $43,575      $41,030
                                   =======      =======      =======
</TABLE>

         A reconciliation of the statutory Federal income tax rate to the
provision for income taxes is as follows:


<TABLE>
<CAPTION>


                                                                        Year Ended December 31,
                                                               ---------------------------------------
                                                                 2000           1999            1998
                                                               --------       --------        --------
                                                                        (Thousands of Dollars)
<S>                                                            <C>            <C>             <C>
    Provision at statutory Federal income tax
      Rate of 35% .......................................      $ 45,011       $ 40,806        $ 36,773
    Increase (decrease) in tax provision resulting from -
       State income taxes net of Federal tax benefit ....         3,324          2,999           3,504
       Other - net ......................................           527           (230)            753
                                                               --------       --------        --------

          Provision for income taxes ....................      $ 48,862       $ 43,575        $ 41,030
                                                               ========       ========        ========

    Effective tax rate ..................................         37.99%         37.38%          39.05%
                                                               ========       ========        ========
</TABLE>


         Net cash payments made to Williams for income taxes were $26.3 million,
$35.5 million and $26.7 million in 2000, 1999 and 1998, respectively.

(5)      LONG-TERM DEBT, LEASES AND BANKING ARRANGEMENTS

Debt Covenants

         The terms of Pipeline's debt indentures preclude the issuance of
mortgage bonds. The indentures contain provisions for the acceleration of
repayment or the reset of interest rates under certain conditions. Pipeline's
debt indentures also contain restrictions which, under certain circumstances,
limit the issuance of additional debt and restrict the disposal of a major
portion of its natural gas pipeline system. Pipeline's debt indentures also
contain provisions limiting common stock dividends. Under the most restrictive
provisions, the amount of Pipeline's retained earnings available for dividends
on its common stock as of December 31, 2000, was approximately $191.8 million.

                                      -20-

<PAGE>   23

                         NORTHWEST PIPELINE CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

================================================================================
Adjustable Interest Rate Notes

         The interest rate on these notes will be adjusted periodically based on
a calculation using the United States Treasury Rate, but will never exceed 25%
or be less than 9% per annum. The interest rate at December 31, 2000 was 9%.

Sinking Fund Requirements and Maturities

         As of December 31, 2000, cumulative sinking fund requirements and other
maturities of long-term debt for each of the next five years are as follows:

<TABLE>
<CAPTION>

                                                                 (Thousands of
                                                                    Dollars)
                                                                    --------
<S>                                                                 <C>
                         2001 ................................      $  1,667
                         2002 ................................         1,662
                         2003 ................................         7,500
                         2004 ................................         7,500
                         2005 ................................         7,500
                         Thereafter ..........................      $344,984
                                                                    --------
                            Total ............................      $370,813
                                                                    ========
</TABLE>

Line-of-Credit Arrangements

         During 2000, Williams replaced its $1 billion Revolving Credit Facility
with a $700 million Revolving Credit Facility. Pipeline is a participant in this
$700 million Revolving Credit Facility with Williams and certain affiliated
companies. Pipeline's maximum borrowing availability, subject to prior borrowing
by other affiliated companies, is $400 million, none of which was used by
Pipeline at December 31, 2000. Interest rates vary with current market
conditions based on the base rate of Citibank N.A., federal funds rate or the
London Interbank Offered Rate ("LIBOR"). This new Facility contains
restrictions, which limit, under certain circumstances, the issuance of
additional debt, the attachment of liens on any assets and any change of
ownership of Pipeline. Any borrowings by Pipeline under this new Facility are
not guaranteed by Williams and are based on Pipeline's financial need and credit
worthiness.

Leases

         Pipeline's leasing arrangements include mostly premise and equipment
leases that are classified as operating leases.

         The major operating lease is a leveraged lease, which became effective
during 1982 for Pipeline's headquarters building. The agreement has an initial
term of approximately 27 years, with options for consecutive renewal terms of
approximately 9 years and 10 years. The major component of the lease payment is
set through the initial and first renewal terms of the lease. Various purchase
options exist under the building lease, including options involving adverse
regulatory development.


                                      -21-


<PAGE>   24

                         NORTHWEST PIPELINE CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

================================================================================

         Pipeline subleases portions of its headquarters building to third
parties under agreements with varying terms. Following are the estimated future
minimum yearly rental payments required under operating leases, which have
initial or remaining noncancelable lease terms in excess of one year:

<TABLE>
<CAPTION>
                                                           (Thousands
                                                            of Dollars)
                                                           ------------
<S>                                                          <C>
                         2001 ..........................     $ 8,806
                         2002 ..........................       8,806
                         2003 ..........................       8,806
                         2004 ..........................       8,806
                         2005 ..........................       8,806
                         Thereafter ....................      55,243
                                                             -------

                                                             $99,273
                         Less: noncancelable
                          Subleases ....................      16,600
                                                             -------

                              Total ....................     $82,673
                                                             =======
</TABLE>

         Operating lease rental expense amounted to $8.8 million, $8.3 million
and $8.3 million for 2000, 1999 and 1998, respectively. Capital lease payments
for the periods presented are not significant.

(6)      EMPLOYEE BENEFIT PLANS

         Pipeline's employees are covered by Williams' non-contributory
defined-benefit pension plan and Williams' health care plan that provides
postretirement medical benefits to certain retired employees. Contributions for
pension and postretirement medical benefits related to Pipeline's participation
in these plans were $2.8 million, $4.9 million and $5.5 million in 2000, 1999
and 1998, respectively. These amounts are currently recoverable in Pipeline's
rates.

         Pipeline's employees are also covered by various Williams'
defined-contribution plans. Pipeline's costs related to these plans totaled $1.8
million, $1.7 million and $1.9 million in 2000, 1999 and 1998, respectively.

(7)      STOCK-BASED COMPENSATION

         Williams has several plans providing for common stock-based awards to
its employees and employees of its subsidiaries. The plans permit the granting
of various types of awards including, but not limited to, stock options, stock
appreciation rights, restricted stock and deferred stock. Awards may be granted
for no consideration other than prior and future services or based on certain
financial performance targets being achieved. The purchase price per share for
stock options may not be less than the market price of the underlying stock on
the date of grant. Depending on the terms of the respective plans, stock options
generally become exercisable in one-third increments each year from the
anniversary of the grant or after three and five years, subject to accelerated
vesting if certain future stock prices are achieved. Stock options expire 10
years after grant.

         FAS No. 123, "Accounting for Stock-Based Compensation," requires that
companies who continue to apply APB Opinion No. 25 disclose pro forma net income
assuming that the fair-value method in FAS 123 had been applied in measuring
compensation cost. Pro forma net income for Pipeline was $78.4 million, $71.5
million and $63 million for 2000, 1999 and 1998, respectively. Reported net
income was $79.7 million, $73 million and $64 million for 2000, 1999 and 1998,
respectively. Pro forma amounts for 2000 include compensation expense for
certain awards made in 1999 and the total compensation expense from awards made
in 2000, as these awards fully vested in 2000 as a result of accelerated vesting
provisions. Pro forma amounts for 1999 include the remaining total compensation
expense from awards made in 1998 and the total compensation from certain awards
made in 1999, as these awards

                                      -22-

<PAGE>   25

                         NORTHWEST PIPELINE CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

================================================================================
fully vested in 1999 as a result of the accelerated vesting provisions. Pro
forma amounts for 1998 include the remaining total compensation expense from the
awards made in 1997 as these awards fully vested in 1998 as a result of the
accelerated vesting provisions. Since compensation expense from stock options is
recognized over the future years' vesting period for pro forma disclosure
purposes, and additional awards generally are made each year, pro forma amounts
may not be representative of future years' amounts.

         Stock options granted to employees of Pipeline in 2000, 1999 and 1998
were 135,851 shares, 160,647 shares and 149,850 shares, respectively, at a
weighted average grant date fair value of $15.44, $11.90 and $8.19,
respectively. Stock options outstanding and options exercisable for employees of
Pipeline were 1,200,313 shares and 1,169,078 shares, respectively, at December
31, 2000; 1,182,172 shares and 1,150,997 shares, respectively, at December 31,
1999; and 1,292,429 shares and 1,143,757 shares, respectively, at December 31,
1998.

         The fair value of the stock options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted average
assumptions: expected life of the stock options of approximately five years;
volatility of the expected market price of Williams common stock of 31 percent
(28 percent in 1999 and 25 percent in 1998); risk-free interest rate of 6.5
percent (5.6 percent in 1999 and 5.3 percent in 1998); and a dividend yield of
1.5 percent (1.5 percent in 1999 and 2.0 percent in 1998).

(8)      RELATED PARTY TRANSACTIONS

         As a subsidiary of Williams, Pipeline engages in transactions with
Williams and other Williams subsidiaries characteristic of group operations. As
a participant in Williams' cash management program, Pipeline has advances to and
from Williams through Pipeline's parent company, WGP. The advances are
represented by demand notes. The interest rate on intercompany demand notes is
LIBOR on the first day of the month plus an applicable margin based on the
current Standard and Poor's Rating of the Pipeline. Pipeline received interest
income from advances to these affiliates of $3.4 million, $1.4 million, and $3.2
million during 2000, 1999 and 1998, respectively.

         Williams' corporate overhead expenses allocated to Pipeline were $4.5
million, $4.3 million and $4.1 million for 2000, 1999 and 1998, respectively.
Such expenses have been allocated to Pipeline by Williams primarily based on the
Modified Massachusetts formula, which is a FERC approved method utilizing a
combination of net revenues, gross payroll and gross plant for the allocation
base. In addition, Williams or an affiliate has provided executive, data
processing, legal, aviation, internal audit and other administrative services to
Pipeline on a direct charge basis, which amounted to $4.8 million, $3.8 million
and $3.2 million for 2000, 1999 and 1998, respectively.

         During the periods presented, Pipeline's revenues reflect
transportation and exchange transactions with subsidiaries of Williams. Combined
revenues for these activities totaled $1.2 million, $.6 million and $1.4 million
for 2000, 1999 and 1998, respectively.

         Pipeline has entered into various other transactions with certain
related parties, the amounts of which were not significant. These transactions
and the above-described transactions are charged on the basis of commercial
relationships and prevailing market prices or general industry practices.

(9)      CONTINGENT LIABILITIES AND COMMITMENTS

Pending Rate Cases

         On April 1, 1993, Pipeline began collecting new rates, subject to
refund, under its rate case filed October 1, 1992 ("1993 Rate Case"). Pipeline
made refunds to customers in June 1998 totaling $27 million, including interest,
reflecting the FERC's resolution of all disputed matters in this case. Pipeline
and other parties sought judicial review of the FERC's decision concerning rate
of return on equity. One party sought judicial review of the inclusion of unpaid
accruals in rate base. In July 1998, the FERC issued orders concerning its rate
of return on equity policy in rate proceedings of other pipelines adopting a
formula that gives less weight to the long-term growth component. In April 1999,
the Court of Appeals for the D.C. Circuit remanded the 1993 Rate Case to the
FERC for application of its revised rate of return

                                      -23-

<PAGE>   26

                         NORTHWEST PIPELINE CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

================================================================================
on equity policy. On July 14, 1999, the FERC issued an order requiring Pipeline
to: (a) submit a surcharge plan to the FERC, (b) recalculate rates consistent
with the new weighting formula favoring short term growth, and (c) address in a
remand hearing the appropriate source for Gross Domestic Product ("GDP") growth
data. The new weighting formula generally results in a higher authorized rate of
return on equity. Pipeline and its customers resolved by settlement those issues
relating to long term GDP growth. In February 2000, the FERC approved the
long-term growth settlement and issued an order related to return on equity
issues requiring Pipeline to incorporate the effects of the settlement and to
calculate its allowed rate of return on equity consistent with the recently
announced policy changes in other proceedings. As a part of this recalculation
of allowed return on equity, the FERC provided that Pipeline must use the median
instead of the midpoint of the various results of Discounted Cash Flow ("DCF")
analysis for a proxy group. This results in a 13.67 percent return on equity for
Pipeline. On April 3, 2000, Pipeline made the necessary compliance filings to
implement the FERC's decision including the establishment of surcharges in order
to recollect moneys that shippers owe Pipeline for these corrective actions.
During the first quarter of 2000, Pipeline recorded surcharges of $11.4 million,
of which $7 million increased revenues and $4.4 million, representing interest,
increased other income. The results of these adjustments are reflected in the
accompanying statements. On July 14, 2000, the FERC issued an order denying
customer rehearing requests and approving Pipeline's compliance filing. The
order reaffirmed Pipeline's right to use the median result from the DCF proxy
group analysis. The FERC's action resulted in Pipeline's booking $3.2 million of
additional revenues and $2.6 million of interest income in July 2000. Some of
Pipeline's customers have sought judicial review concerning the FERC's orders
with respect to return on equity issues.

         On February 1, 1996, Pipeline began collecting new rates, subject to
refund, under the provisions of its rate case filed August 1, 1995 ("1995 Rate
Case"). On October 18, 1996, the Commission issued an order approving a
settlement concerning certain liquid revenue credit issues relating to
Pipeline's agreement with an affiliate to have liquid hydrocarbon products
extracted from Pipeline's transportation stream at Ignacio, Colorado. The
litigation of all remaining issues took place in late 1996. Pipeline's rate
application sought a revenue increase for increases in rate base related
primarily to the Northwest Natural and Expansion II facilities placed into
service December 1, 1995 and increased operating costs primarily associated with
an increase in headquarters office rent. During the first quarter of 1998, the
ALJ issued an Initial Decision. The ALJ found that the facts of this case
continue to support Pipeline's capital structure of 55% equity and 45% debt. The
ALJ also determined that Pipeline fits within the average risk range for
determining pipeline return on equity and allowed a return on equity of 11.2
percent. On June 1, 1999, the FERC issued its order affirming many aspects of
the ALJ's initial decision, but finding that the return on equity issue should
be resolved by using the FERC's new policy concerning rate of return
determinations. This resulted in an allowed return on equity of 12.22 percent.
During the second quarter of 1999, Pipeline reduced its rate refund liabilities
$9.9 million, of which $7.7 million increased revenues and $2.2 million reduced
interest expense, to reflect the FERC's action in this proceeding. On September
29, 2000, the FERC issued its Order on Rehearing, which, for the most part,
reaffirmed the FERC's earlier June 1, 1999 decision. Pipeline made a compliance
filing on October 16, 2000. Upon approval, Pipeline will issue appropriate
refunds to its customers, and does not anticipate other changes to current rate
refund liabilities related to this rate case.

         On March 1, 1997, Pipeline began collecting new rates, subject to
refund, under the provisions of its rate case filed August 30, 1996 ("1996 Rate
Case"). The application sought an increase in rates due to a proposed use of a
higher depreciation rate which also considers a net negative salvage value for
Pipeline's facilities, higher operating costs and a redesign of Pipeline's rates
because of impacts relating to the sale of Pipeline's south-end facilities in
the third quarter of 1996. On July 22, 1997, Pipeline filed a settlement to
resolve all issues in this rate case. On November 25, 1997, the FERC, over the
objection of one dissenting party, issued an order approving all aspects of the
settlement. The one dissenting party sought and was denied rehearing of the
FERC's order. That party sought judicial review of certain aspects of the FERC's
decision. Pipeline made refunds to customers in August 1998 totaling $16.7
million, including interest, in this rate case. A settlement was reached with
the one dissenting party on issues pending review in the proceeding and on other
business related issues. The settlement with the one dissenting party had no
impact on Pipeline's financial position or results of operations. All remaining
judicial challenges in this matter were withdrawn in the third quarter of 2000.

                                      -24-

<PAGE>   27


                         NORTHWEST PIPELINE CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

================================================================================
Significant Litigation

         In 1998, the United States Department of Justice informed Williams that
Jack Grynberg, an individual, had filed claims in the United States District
Court for the District of Colorado under the False Claims Act against Williams
and certain of its wholly-owned subsidiaries including Pipeline. Mr. Grynberg
had also filed claims against approximately 300 other energy companies and
alleged that the defendants violated the False Claims Act in connection with the
measurement and purchase of hydrocarbons. The relief sought was an unspecified
amount of royalties allegedly not paid to the Federal government, treble
damages, a civil penalty, attorneys' fees and costs. On April 9, 1999, the
United States Department of Justice announced that it was declining to intervene
in any of the Grynberg qui tam cases; including the action filed against the
Williams entities in the United States District Court for the District of
Colorado. On October 21, 1999, the Panel on Multi-District Litigation
transferred all of the Grynberg qui tam cases, including the ones filed against
Williams to the United States District Court for the District of Wyoming for
pre-trial purposes. Motions to dismiss the complaint, filed by various
defendants including Williams, are pending.

Other Legal and Regulatory Matters

         On February 9, 2000, the FERC issued a final rule, Order No. 637, in
response to the comments received on the Notice of Proposed Rulemaking ("NOPR")
and Notice of Inquiry ("NOI"). The FERC adopted in Order No. 637 certain
policies that it found are necessary to adjust its current regulatory model to
the needs of the evolving markets, but determined that any fundamental changes
to its regulatory policy, which changes were raised and commented on in the NOPR
and NOI, would be considered after further study and evaluation of the evolving
marketplace. Most significantly, in Order No. 637, the FERC (i) revised its
pricing policy to waive, for a two-year period, the maximum price ceilings for
short-term releases of capacity of less than one year, and (ii) permitted
pipelines to file proposals to implement seasonal rates for short-term services
and term-differentiated rates, subject to certain requirements including the
requirement that a pipeline be limited to recovering its annual revenue
requirement under those rates.

         In addition to the foregoing, various other proceedings are pending
against Pipeline incidental to its operations.

Summary of Contingent Liabilities

         Management believes that the ultimate resolution of the foregoing
matters, based on advise of counsel and after consideration of amounts accrued,
insurance coverage, potential recovery from customers, and other indemnification
arrangements, will not have a materially adverse effect upon Pipeline's future
financial position, results of operations, and cash flow requirements.

Other Matters

         Commitments for construction and acquisition of property, plant and
equipment are approximately $98.2 million at December 31, 2000.


                                      -25-

<PAGE>   28



                         NORTHWEST PIPELINE CORPORATION

QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of quarterly financial data for 2000 and 1999:

<TABLE>
<CAPTION>

                                             Quarter of 2000
                               ----------------------------------------------
                                First       Second        Third        Fourth
                               -------      -------      -------      -------
                                          (Thousands of Dollars)
<S>                            <C>          <C>          <C>          <C>
Operating revenues ......      $79,760      $69,114      $73,819      $73,668
Operating income ........       41,402       34,190       39,027       35,243
Net income ..............       23,980       17,271       21,291       17,200
</TABLE>

         Operating results for the first and third quarters of 2000 include the
recognition of surcharges associated with the 1993 rate case. See Note 9 of
Notes to Consolidated Financial Statements.


<TABLE>
<CAPTION>

                                             Quarter of 2000
                               ----------------------------------------------
                                First       Second        Third        Fourth
                               -------      -------      -------      -------
                                          (Thousands of Dollars)
<S>                            <C>          <C>          <C>          <C>
Operating revenues ......      $70,141      $77,276      $68,642      $71,734
Operating income ........       29,981       42,470       32,509       38,387
Net income ..............       13,276       23,917       15,879       19,941
</TABLE>

         Operating results for the second quarter of 1999 include reductions to
rate refund liabilities associated with the 1995 rate case. See Note 9 of Notes
to Consolidated Financial Statements.



ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.

                                      -26-


<PAGE>   29


                                    PART III


         Since Pipeline meets the conditions set forth in General Instruction
(I)(1)(a) and (b) of Form 10-K, this information is omitted.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)1 AND 2.    FINANCIAL STATEMENTS AND SCHEDULES (included in Parts II
               and IV of this report).

         The financial statements are listed in the Index to Financial
         Statements on page 9. No schedules are required to be filed.

(a)3.          EXHIBITS:

(2)      Plan of acquisition, reorganization, arrangement, liquidation or
         succession:

         *(a) Merger Agreement, dated as of September 20, 1983, between Williams
              and Northwest Energy Company ("Energy") (Exhibit 18 to Energy
              schedule 14D-9 (Amendment No. 3) dated September 22, 1983).

         *(b) The Plan of Merger, dated as of November 7, 1983, between Energy
              and a subsidiary of Williams (Exhibit 2(b) to Pipeline report on
              Form 10-K, No. 1-7414, filed March 22, 1984).

(3)      Articles of incorporation and by-laws:

         *(a) Restated Certificate of Incorporation (Exhibit 3a to Amendment No.
              1 to Registration Statement on Form S-1, No. 2-55-273, filed
              January 13, 1976).

         *(b) By-laws, as amended (Exhibit 3c to Registration Statement on Form
              S-1, No. 2-55273, filed December 30, 1975).

(4)      Instruments defining the rights of security holders, including
         indentures:

         *(a) Note Purchase Agreement, dated as of April 15, 1982, between
              Pipeline and Teachers Insurance and Annuity Association of America
              relating to Adjustable Rate Notes, due March 31, 2002 (Exhibit
              (a)4(e) to Energy Report on Form 10-Q for the quarter ended June
              30, 1982, No. 1-7987).

         *(b) Senior Indenture, dated as of August 1, 1992, between Pipeline and
              Continental Bank, N.A., relating to Pipeline's 9% Debentures, due
              2022 (Exhibit 4.1 to Registration Statement on Form S-3, No.
              33-49150, filed July 2, 1992).

         *(c) Senior Indenture, dated as of November 30, 1995 between Pipeline
              and Chemical Bank, relating to Pipeline's 7.125% Debentures, due
              2025 (Exhibit 4.1 to Registration Statement on Form S-3, No.
              33-62639, filed September 14, 1995).

         *(d) Senior indenture, dated as of December 8, 1997 between Pipeline
              and The Chase Manhattan Bank, relating to Pipeline's 6.625%
              Debentures, due 2007 (Exhibit 4.1 to Registration Statement on
              Form S-3, No. 333-35101, filed September 8, 1997.

         *(e) Credit Agreement dated July 25, 2000, among Pipeline, Williams and
              certain affiliated companies and the banks named therein and
              Citibank N.A., as agent. (Exhibit 4.1 to Williams Form 10-Q for
              the period ended June 30, 2000, Commission File Number 1-4174).

                                      -27-

<PAGE>   30



(10)     Material contracts:

         (c) *(1) Form of Transfer Agreement, dated July 1, 1991, between
                  Pipeline and Gas Processing (Exhibit 10(c)(8) to Pipeline
                  Report on Form 10-K, No. 1-7414, filed March 26, 1992).

             *(2) Form of Operating Agreement, dated July 1, 1991, between
                  Pipeline and Williams Field Services Company (Exhibit 10(c)(9)
                  to Pipeline Report on Form 10-K, No. 1-7414, filed March 26,
                  1992).

(23)     Consent of Independent Auditors
(24)     Power of Attorney with Certified Resolution

(b)  REPORTS ON FORM 8-K:

         No reports on Form 8-K have been filed by Pipeline during the last
quarter of the period covered by this report.














----------
         *Exhibits so marked have heretofore been filed with the Securities and
Exchange Commission as part of the filing indicated and are incorporated herein
by reference.

                                      -28-


<PAGE>   31



                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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 CORPORATION
                                              (Registrant)


                                     By   /s/ Jeffrey R. Valentine
                                       ----------------------------------------
                                              Jeffrey R. Valentine
                                      Controller (Principal Accounting Officer)

Date:  March 12, 2001

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

           Signature                              Title
           ---------                              -----
<S>                                 <C>
     /s/ Keith E. Bailey*           Chairman of the Board and Director
------------------------------
         Keith E. Bailey


     /s/ Cuba Wadlington, Jr.*      President (Principal Executive Officer)
------------------------------      and Director
         Cuba Wadlington, Jr.


     /s/ J. Douglas Whisenant*      Sr. Vice President and General Manager
------------------------------      and Director
         J. Douglas Whisenant


     /s/ Nick A. Bacile*            Vice President and Treasurer (Principal
------------------------------      Financial Officer)
         Nick A. Bacile


     /s/ Jeffrey R. Valentine*      Controller (Principal Accounting Officer)
------------------------------
         Jeffrey R. Valentine



*  By   /s/ Jeffrey R. Valentine
     ----------------------------
            Jeffrey R. Valentine
            Attorney-in-fact
</TABLE>


Date:  March 12, 2001

                                      -29-

<PAGE>   32

                                  EXHIBIT INDEX


<TABLE>
<CAPTION>

EXHIBIT
 NUMBER        DESCRIPTION
-------        -----------
<S>            <C>
   23          Consent of Independent Auditors

   24          Power of Attorney with Certified Resolution
</TABLE>