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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D. C. 20549
 FORM 10-K
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the fiscal year ended
December 31, 2008
 Or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the Transition Period
from

to
 Commission File Number 1-7414
 NORTHWEST PIPELINE GP
  DELAWARE
    
    26-1157701(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)295 Chipeta Way, Salt Lake City, Utah
    
    84108(Address of principal executive offices)
    
    (Zip Code)
 
 
 
 o þ
 o þ
 þ o
 þ
  Large accelerated filer
o
    
    Accelerated filer o

    Non-accelerated filer þ (Do not check if a smaller reporting company)

    Smaller reporting company
o
 o þ




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##### 



TABLE OF CONTENTS
 Heading
    
    PagePART IItem 1.
    BUSINESS
    
    
    1Item 1A.
    RISK FACTORS
    
    
    11Item 1B.
    UNRESOLVED STAFF COMMENTS
    
    
    23Item 2.
    PROPERTIES
    
    
    23Item 3.
    LEGAL PROCEEDINGS
    
    
    23Item 4.
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    23PART IIItem 5.
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    24Item 6.
    SELECTED FINANCIAL DATA
    
    
    24Item 7.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
    
    
    24Item 7A.
    QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    36Item 8.
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    37Item 9.
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
    
    
    64Item 9A(T).
    CONTROLS AND PROCEDURES
    
    
    64Item 9B.
    OTHER INFORMATION
    
    
    64PART IIIItem 10.
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    65Item 11.
    EXECUTIVE COMPENSATION
    
    
    66Item 12.
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    68Item 13.
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
    
    
    68Item 14.
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    70PART IVItem 15.
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    71EX-12EX-23EX-24EX-31.(a)EX-31.(b)EX-32
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NORTHWEST PIPELINE GP
 FORM 10-K
 
 PART I
 
 Item 1. BUSINESS
 GENERAL
    PIPELINE SYSTEM, CUSTOMERS AND COMPETITION
 Transportation and Storage
    1




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
    
    Jackson Prairie:We own a one-third interest in the Jackson Prairie underground storage
facility located near Chehalis, Washington, with the remaining interests owned by two of our
distribution customers. As of December 31, 2008, our share of the firm seasonal storage
service in this facility was approximately 7.5 Bcf of working natural gas storage capacity
and up to 383 MMcf* per day of peak day deliveries. Additionally, our share of the
best-efforts delivery capacity was 50 MMcf per day. As described below, we are participating
in an ongoing expansion of Jackson Prairie.
    
    Plymouth LNG:We also own and operate a Liquid Natural Gas (LNG) storage facility
located near Plymouth, Washington, which provides standby service for our customers during
extreme peaks in demand. The facility has a total LNG storage capacity equivalent to 2.3 Bcf
of working natural gas, liquefaction capability of 12 MMcf per day and regasification
capability of 300 MMcf per day. Certain of our major customers own the working natural gas
stored at the LNG plant.
    
    Clay Basin Field:We have a contract with a third party under which we contract for
natural gas storage services in an underground storage reservoir in the Clay Basin Field
located in Daggett County, Utah. We are authorized to utilize the Clay Basin Field at a
seasonal storage level of 3.0 Bcf of working natural gas, with a firm delivery capability of
25 MMcf of natural gas per day.
 
 *
    
    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. The term Dth means one dekatherm, which is
equal to one MMBtu. The term MDth means thousand dekatherms. The term MMDth means million
dekatherms. Competition
   2




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Supply and Demand Dynamics
  Customers
  3




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CAPITAL PROJECTS
  Colorado Hub Connection Project
   Jackson Prairie Underground Expansion
    Sundance Trail Expansion
  4




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OPERATING STATISTICS
 Throughput
  Year Ended December 31,2008
    
    2007
    
    2006(In trillion British Thermal Units)Total Throughput (1)
    
    
    781
    
    
    
    757
    
    
    
    676Average Daily Transportation Volumes
    
    
    2.1
    
    
    
    2.1
    
    
    
    1.9Average Daily Reserved Capacity Under Base Firm
Contracts, excluding peak capacity
    
    
    2.5
    
    
    
    2.5
    
    
    
    2.5Average Daily Reserved Capacity Under Short-Term
Firm Contracts (2)
    
    
    .7
    
    
    
    .8
    
    
    
    .9
 
 (1)
    
    Parachute Lateral volumes of 102 TBtu in 2008 and 55 TBtu in 2007 are excluded from total
throughput as these volumes flow under separate contracts that do not result in mainline
throughput.(2)
    
    Includes additional capacity created from time to time through the installation of new
receipt or delivery points or the segmentation of existing mainline capacity. Such capacity
is generally marketed on a short-term firm basis. Seasonality
  2008
    
    Jan-Mar
    
    Apr-Jun
    
    Jul-Sep
    
    Oct-Dec
    
    TotalRevenues ($ in 000)
    
    $
    107,405
    
    
    $
    106,450
    
    
    $
    108,542
    
    
    $
    112,457
    
    
    $
    434,854Revenue %
    
    
    24.7
    %
    
    
    24.5
    %
    
    
    25.0
    %
    
    
    25.8
    %
    
    
    100
    %Operating Expenses ($ in 000)
    
    $
    58,239
    
    
    $
    59,774
    
    
    $
    55,500
    
    
    $
    60,163
    
    
    $
    233,676Throughput (TBtu) (1)
    
    
    220
    
    
    
    171
    
    
    
    179
    
    
    
    211
    
    
    
    781Throughput %
    
    
    28.2
    %
    
    
    21.9
    %
    
    
    22.9
    %
    
    
    27.0
    %
    
    
    100
    %
 
 (1)
    
    Parachute Lateral volumes are excluded from throughput as these volumes flow under
separate contracts that do not generally result in mainline throughput. REGULATORY MATTERS
 FERC Regulation
  
    
    transportation and storage of natural gas;
    
    rates and charges;
    
    terms of service including creditworthiness requirements;
    
    construction of new facilities;
 5




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
    
    extension or abandonment of service and facilities;
    
    accounts and records;
    
    depreciation and amortization policies;
    
    relationships with gas marketing functions within Williams; and
    
    initiation and discontinuation of services.
      FERC Policy Statement on Income Tax Allowances
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FERC Policy Statement on Proxy Groups and Return on Equity
     Energy Policy Act of 2005
  7




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Safety and Maintenance
    Environmental Regulation
   
    
    requiring the acquisition of permits to conduct regulated activities;
    
    restricting the manner in which we can release materials into the environment;
    
    imposing investigatory and remedial obligations to mitigate pollution from
former or current operations;
    
    assessing administrative, civil and criminal penalties for failure to comply
with applicable legal requirements; and
    
    in certain instances, enjoining some or all of the operations of facilities
deemed in non-compliance with permits issued pursuant to applicable laws and
regulations.
  8




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9




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INSURANCE
  EMPLOYEES
  10




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TRANSACTIONS WITH AFFILIATES
  
 Item 1A. RISK FACTORS
 FORWARD LOOKING STATEMENTS/RISK FACTORS AND CAUTIONARY STATEMENT FOR
PURPOSES OF THE SAFE HARBOR PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
   
    
    amounts and nature of future capital expenditures;
    
    expansion and growth of our business and operations;
    
    financial condition and liquidity;
    
    business strategy;
    
    cash flow from operations or results of operations;
    
    rate case filings; and
    
    natural gas and natural gas liquids prices and demand.
  
    
    availability of supplies (including the uncertainties inherent in assessing and
estimating future natural gas reserves), market demand, volatility of prices, and
the availability and costs of capital;
    
    inflation, interest rates, and general economic conditions
(including the recent economic slowdown and the disruption of global
credit markets and the impact of these events on our customers and
suppliers);
    
    the strength and financial resources of our competitors;
    
    development of alternative energy sources;
    
    the impact of operational and development hazards;
    
    costs of, changes in, or the results of laws, government regulations (including
proposed climate change legislation), environmental liabilities, litigation, and rate
proceedings;
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
    
    our costs and funding obligations for defined benefit pension plans and other
postretirement benefit plans;
    
    increasing maintenance and construction costs;
    
    changes in the current geopolitical situation;
    
    our exposure to the credit risk of our customers;
    
    risks related to strategy and financing, including restrictions stemming from our
debt agreements, future changes in our credit ratings and the availability and cost
of credit;
    
    risk associated with future weather conditions;
    
    acts of terrorism; and
    
    additional risks described in our filings with the Securities and Exchange
Commission (SEC).
    RISK FACTORS
  Risks Inherent to our Industry and Business
 Our natural gas transportation and storage activities involve numerous risks that might result in
accidents and other operating risks and hazards .
  
    
    fires, blowouts, cratering and explosions;
    
    uncontrolled releases of natural gas;
    
    pollution and other environmental risks;
    
    natural disasters;
    
    aging pipeline infrastructure and mechanical problems;
    
    damage inadvertently caused by third party activity, such as operation of
construction equipment; and
    
    terrorist attacks or threatened attacks on our facilities or those of other energy
companies.
 12




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Our current pipeline infrastructure is aging, which may adversely affect our business.
  Increased competition from alternative natural gas transportation and storage options and
alternative fuel sources could have a significant financial impact on us.
   13




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We may not be able to maintain or replace expiring natural gas transportation and storage contracts
at favorable rates or on a long-term basis.
   
    
    the level of existing and new competition to deliver natural gas to our markets;
    
    the growth in demand for natural gas in our markets;
    
    whether the market will continue to support long-term firm contracts;
    
    whether our business strategy continues to be successful;
    
    the level of competition for natural gas supplies in the production basins serving
us; and
    
    the effects of state regulation on customer contracting practices.
  Any significant decrease in supplies of natural gas in our areas of operation could adversely
affect our business and operating results.
    Decreases in demand for natural gas could adversely affect our business.
  14




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Significant prolonged changes in natural gas prices could affect supply and demand and cause a
termination of our transportation and storage contracts or a reduction in throughput on our system.
  Our operations are subject to governmental laws and regulations relating to the protection of the
environment, which could expose us to significant costs and liabilities and could exceed our
current expectations.
    We may be subject to legislative and regulatory responses to climate change with which compliance
may be costly.
  15




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The failure of new sources of natural gas production or LNG import terminals to be successfully
developed in North America could increase natural gas prices and reduce the demand for our
services.
  We depend on certain key customers for a significant portion of our revenues. The loss of any of
these key customers or the loss of any contracted volumes could result in a decline in our
business.
  We are exposed to the credit risk of our customers.
  If third-party pipelines and other facilities interconnected to our pipeline and facilities become
unavailable to transport natural gas, our revenues could be adversely affected.
  16




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We do not own all of the land on which our pipeline and facilities are located, which could disrupt
our operations.
  We do not insure against all potential losses and could be seriously harmed by unexpected
liabilities or by the inability of the insurers we do use to satisfy our claims.
    Execution of our capital projects subjects us to construction risks, increases in labor costs and
materials, and other risks that may adversely affect financial results.
  
    
    the ability to obtain necessary approvals and permits by regulatory agencies on a
timely basis and on acceptable terms;
    
    the availability of skilled labor, equipment, and materials to complete expansion
projects;
 17




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
    
    potential changes in federal, state and local statutes and regulations, including
environmental requirements, that prevent a project from proceeding or increase the
anticipated cost of the project;
    
    impediments on our ability to acquire rights-of-way or land rights on a timely basis
and on acceptable terms;
    
    the ability to construct projects within estimated costs, including the risk of cost
overruns resulting from inflation or increased costs of equipment, materials, labor or
other factors beyond our control, that may be material; and
    
    the ability to access capital markets to fund construction
projects.
  Potential changes in accounting standards might cause us to revise our financial results and
disclosures in the future, which might change the way analysts measure our business or financial
performance.
  Risks Related to Strategy and Financing
 Our debt agreements impose restrictions on us that may adversely affect our ability to operate our
business.
    18




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Events
in the global credit markets created a shortage in the
availability of credit and have led to credit market volatility.
  The continuation of recent economic conditions, including disruptions in the global credit markets,
could adversely affect our results of operations.
  A downgrade of our current credit ratings could impact our liquidity, access to capital and our
costs of doing business, and maintaining our current credit ratings is under the control of
independent third parties.
  
    
    economic downturns;
    
    deteriorating capital market conditions;
    
    declining market prices for natural gas;
    
    terrorist attacks or threatened attacks on our facilities or those of other energy
companies;
    
    the overall health of the energy industry, including the bankruptcy or insolvency of
other companies.
  Williams can exercise substantial control over our distribution policy and our business and
operations and may do so in a manner that is adverse to our interests.
  19




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
    
    decisions on financings and our capital raising activities;
    
    mergers or other business combinations; and
    
    acquisition or disposition of assets.
  The financial condition and liquidity of Williams affects our access to capital, our credit
standing and our financial condition.
   Risks Related to Regulations that Affect our Industry
 Our natural gas transportation and storage operations are subject to regulation by FERC, which
could have an adverse impact on our ability to establish transportation and storage rates that
would allow us to recover the full cost of operating our pipeline, including a reasonable return.
  
    
    transportation of natural gas in interstate commerce;
    
    rates, operating terms and conditions of service;
    
    the types of services we may offer to our customers, including initiation and
discontinuation of services;
    
    certification and construction of new facilities;
    
    acquisition, extension, disposition or abandonment of facilities;
    
    accounts and records;
    
    depreciation and amortization policies;
    
    relationships with marketing functions within Williams involved in certain aspects of the natural
gas business; and
    
    market manipulation in connection with interstate sales, purchases or transportation
of natural gas.
  20




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We could be subject to penalties and fines if we fail to comply with FERC regulations.
  The outcome of future rate cases to set the rates we can charge customers on our pipeline might
result in rates that lower our return on the capital that we have invested in our pipeline.
  Legal and regulatory proceedings and investigations relating to the energy industry and capital
markets have adversely affected our business and may continue to do so.
   21




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Risks Related to Employees, Outsourcing of Non-Core Support Activities, and Technology.
 Institutional knowledge residing with current employees nearing retirement eligibility might not be
adequately preserved.
  Failure of or disruptions to our outsourcing relationships might negatively impact our ability to
conduct our business.
   Our costs and funding obligations for defined benefit pension plans and costs for other
postretirement benefit plans, in which we participate, are affected by factors beyond our control.
  Risks Related to Weather, Other Natural Phenomena and Business Disruption
 Our assets and operations can be affected by weather and other natural phenomena.
   22




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Acts of terrorism could have a material adverse effect on our financial condition, results of
operations and cash flows.
  
 Item 1B. UNRESOLVED STAFF COMMENTS
  
 Item 2. PROPERTIES
  
 Item 3. LEGAL PROCEEDINGS
  
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  23




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PART II
 
 Item 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
   
 Item 6. SELECTED FINANCIAL DATA
  Year Ended December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(Thousands of Dollars)Income Statement Data:Operating revenues
    
    $
    434,854
    
    
    $
    421,851
    
    
    $
    324,250
    
    
    $
    321,457
    
    
    $
    338,532Net income
    
    
    155,371
    
    
    
    439,726
    (A)
    
    
    54,462
    
    
    
    68,974
    
    
    
    73,974Balance Sheet Data (at period
end):Total assets
    
    
    2,082,172
    
    
    
    2,056,471
    
    
    
    2,049,324
    
    
    
    1,692,371
    
    
    
    1,670,499Long-term debt, including
current maturities
    
    
    693,240
    
    
    
    693,736
    
    
    
    687,075
    
    
    
    520,080
    
    
    
    527,562Total owners equity
    
    
    1,184,714
    
    
    
    1,185,616
    
    
    
    857,945
    
    
    
    756,346
    
    
    
    737,372Cash Distributions
    
    
    419,342
    
    
    
    109,770
    
    
    
    
    
    
    
    50,000
    
    
    
    60,000
 Note:
    
    Earnings and distributions/dividends per partnership unit/common share are not presented for
2004 through 2008. We were a wholly-owned subsidiary of Williams at December 31, 2007 and for
all prior periods presented. Distributions for 2008 were made to our partners based upon each
partnerships ownership interest.
 
 (A)
    
    Through September 30, 2007, we used the liability method of accounting for income taxes
which required, among other things, provisions for all temporary differences between the
financial basis and the tax basis in our assets and liabilities and adjustments to the
existing deferred tax balances for changes in tax rates. Following our conversion to a
general partnership on October 1, 2007, we are no longer subject to income tax. On October
1, 2007, we reversed deferred income tax liabilities of approximately $311.8 million to
income and $10.2 million of deferred income tax assets to other comprehensive income. 
 Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 GENERAL
  24




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HOW WE EVALUATE OUR OPERATIONS
  
    
    the level of capacity reserved under our long-term firm transportation and storage
contracts;
    
    the level of revenues provided by our short-term firm and interruptible transportation
and storage services;
    
    our operating expenses; and
    
    our cash available for distribution.
 Long-Term Firm Service
  Short-Term
Firm and Interruptible Service
  Operating Expenses
  Cash Available for Distribution
  25




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FACTORS THAT IMPACT OUR BUSINESS
     OPERATIONS
  Transportation Services
   26




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Storage Services
  RECENT MARKET EVENTS
  
    
    We have no significant debt maturities until 2016.
    
    As of December 31, 2008, we have approximately $66.0 million of available cash from
return of advances made to affiliates and available capacity under our Credit Facility.
(See further discussion in Managements Discussion and Analysis of Financial Condition
and Results of Operations  Method of Financing.)
    
    A significant portion of our transportation and storage services are provided
pursuant to long-term firm contracts that obligate our customers to pay us monthly
capacity reservation fees regardless of the amount of pipeline or storage capacity
actually utilized by a customer.
 OUTLOOK
   CRITICAL ACCOUNTING POLICIES, ESTIMATES, JUDGMENTS AND SENSITIVITIES
  Regulatory Accounting
  Contingencies
  27




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Environmental Liabilities
  Pension and Postretirement Obligations
  RESULTS OF OPERATIONS
 Analysis of Financial Results
  Years Ended December 31, 2007 and 2008
    28




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Years Ended December 31, 2006 and 2007
      29




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CAPITAL RESOURCES AND LIQUIDITY
    SOURCES (USES) OF CASH
 Years Ended December 31,2008
    
    
    2007
    
    
    2006(Thousands of Dollars)Net cash provided (used) by:Operating activities
    
    $
    239,014
    
    
    $
    205,357
    
    
    $
    159,807Financing activities
    
    
    (126,848
    )
    
    
    (142,523
    )
    
    
    266,919Investing activities
    
    
    (112,318
    )
    
    
    (63,826
    )
    
    
    (484,946
    )Decrease in cash and cash
equivalents
    
    $
    (152
    )
    
    $
    (992
    )
    
    $
    (58,220
    )
 Operating Activities
  30




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Financing Activities
  
    
    We issued $250 million aggregate principal amount of 6.05 percent senior unsecured notes
due 2018.
    
    We repaid the $250 million borrowed under the Williams revolving credit agreement in
2007.
    
    We received proceeds of $300.9 million from the sale of partnership interest.
    
    We paid distributions of $419.3 million to our partners.
  
    
    We issued $185 million aggregate principal amount of 5.95 percent senior unsecured notes
due 2017.
    
    We borrowed $250 million under the Williams revolving credit agreement.
    
    We retired $175 million of 8.125 percent senior unsecured notes due 2010.
    
    We retired $250 million of 6.625 percent senior unsecured notes due 2007.
    
    We paid distributions of $109.8 million to Williams.
  
    
    We issued $175 million aggregate principal amount of 7 percent senior unsecured notes
due 2016.
    
    We received a capital contribution of $65 million from Williams.
 Investing Activities
  
    
    Capital expenditures totaled $78.6 million primarily related to normal maintenance and
compliance and the expansion of the Jackson Prairie storage facility.
    
    We advanced $26.9 million to Williams.
  
    
    Capital expenditures totaled $157.2 million primarily related to normal maintenance and
compliance.
    
    We received $79.8 million of proceeds from the sale of the Parachute Lateral to an
affiliate.
    
    We received $10.9 million repayment of advances made to Williams.
  
    
    Capital expenditures totaled $473.6 million primarily related to the capacity
replacement project.
 31




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METHOD OF FINANCING
 Working Capital
    Short-Term Liquidity
   Credit Agreement
    32




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Long-Term Financing
  CAPITAL REQUIREMENTS
    CREDIT RATINGS
  Moodys Investors Service
    
    Baa2Standard and Poors
    
    BBB-Fitch Ratings
    
    BBB
    33




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OTHER
 Contractual Obligations
  2009
    
    
    2010-2011
    
    
    2012-2013
    
    
    Thereafter
    
    
    TotalLong-term debt,
including current
portion:Principal
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    695.0
    
    
    $
    695.0Interest
    
    
    44.4
    
    
    
    88.9
    
    
    
    88.9
    
    
    
    209.9
    
    
    
    432.1Operating leases
    
    
    13.9
    
    
    
    7.5
    
    
    
    7.5
    
    
    
    18.8
    
    
    
    47.7Purchase Obligations:Natural gas
purchase, storage,
transportation and
construction
    
    
    28.4
    
    
    
    4.9
    
    
    
    2.0
    
    
    
    
    
    
    
    35.3Other
    
    
    1.6
    
    
    
    0.3
    
    
    
    0.2
    
    
    
    
    
    
    
    2.1Other long-term
liabilities, including
current 
portion (1)(2)
(3)
    
    
    1.5
    
    
    
    3.0
    
    
    
    3.0
    
    
    
    1.7
    
    
    
    9.2Total
    
    $
    89.8
    
    
    $
    104.6
    
    
    $
    101.6
    
    
    $
    925.4
    
    
    $
    1,221.4
 
 (1)
    
    Does not include estimated contributions to the pension and other postretirement benefit
plans. We made contributions to the pension and other postretirement benefit plans of $7.8
million in 2008, $3.2 million in 2007 and $5.7 million in 2006. (See Item 8. Financial
Statements and Supplementary Data  Notes to Consolidated Financial Statements: Note 5.
Employee Benefit Plans.) The 2008 economic downturn resulted in a significant decrease in the
funded status of the Williams sponsored tax-qualified pension plans. As a result, we
anticipate that future contributions to these pension plans may vary significantly from
historical contributions if investment returns do not return the expected levels. Future
contributions may also be impacted if actual results differ significantly from estimated
results or assumptions such as interest rates, retirement rates, mortality and other
significant assumptions or by changes to current legislation and regulations.(2)
    
    Does not include estimated settlement of asset retirement obligations. (See Item 8 Financial
Statements and Supplementary Data  Notes to Consolidated Financial Statements: Note 9.
Asset Retirement Obligations.)(3)
    
    Does not include non-current regulatory liabilities comprised of negative salvage and other
postretirement benefits. (See Item 8. Financial Statements and Supplementary Data  Notes to
Consolidated Financial Statements: Note 10. Regulatory Assets and Liabilities.) Off-Balance Sheet Arrangements
  34




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##### Table of Contents



Impact of Inflation
  Environmental Matters
  Safety Matters
  Legal Matters
  Regulatory Proceedings
  CONCLUSION
  35




---



##### Table of Contents



Item 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
  December 31, 2008Fixed rates on long-term debt:5.95% senior unsecured notes due 2017
    
    $
    185,0006.05% senior unsecured notes due 2018
    
    
    250,0007.00% senior unsecured notes due 2016
    
    
    175,0007.125% senior unsecured notes due 2025
    
    
    85,000695,000Unamortized debt discount
    
    
    1,760Total long-term debt
    
    $
    693,240
  Credit Risk
  Market Risk
  36




---



##### Table of Contents



Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 INDEX TO FINANCIAL STATEMENTS
 PageManagements annual report on internal control over financial reporting
    
    
    38Report of independent registered public accounting firm
    
    
    39Consolidated statements of income for the years ended
December 31, 2008, 2007 and 2006
    
    
    40Consolidated balance sheets at December 31, 2008 and 2007
    
    
    41Consolidated statements of owners equity for the years ended
December 31, 2008, 2007 and 2006
    
    
    43Consolidated statements of comprehensive income for the years ended
December 31, 2008, 2007 and 2006
    
    
    44Consolidated statements of cash flows for the years ended
December 31, 2008, 2007 and 2006
    
    
    45Notes to consolidated financial statements
    
    
    46
 37




---



##### Table of Contents



MANAGEMENTS ANNUAL REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING
   Internal Control 
Integrated Framework.
  38




---



##### Table of Contents



39




---



##### Table of Contents



NORTHWEST PIPELINE GP
 
 CONSOLIDATED STATEMENTS OF INCOME
  Years Ended December 31,2008
    
    
    2007
    
    
    2006OPERATING REVENUES
    
    $
    434,854
    
    
    $
    421,851
    
    
    $
    324,250OPERATING EXPENSES:General and administrative
    
    
    60,403
    
    
    
    65,772
    
    
    
    56,463Operation and maintenance
    
    
    72,831
    
    
    
    66,847
    
    
    
    65,763Depreciation
    
    
    86,184
    
    
    
    84,731
    
    
    
    79,488Regulatory credits
    
    
    (2,617
    )
    
    
    (3,663
    )
    
    
    (4,469
    )Taxes, other than income taxes
    
    
    16,875
    
    
    
    13,997
    
    
    
    15,018Regulatory liability reversal
    
    
    
    
    
    
    (16,562
    )
    
    
    Total operating expenses
    
    
    233,676
    
    
    
    211,122
    
    
    
    212,263Operating income
    
    
    201,178
    
    
    
    210,729
    
    
    
    111,987OTHER INCOME  net:Interest income Affiliated
    
    
    813
    
    
    
    2,983
    
    
    
    3,920Other
    
    
    6
    
    
    
    2,681
    
    
    
    3,423Allowance for equity funds used during construction
    
    
    812
    
    
    
    2,091
    
    
    
    8,947Miscellaneous other income (expense), net
    
    
    (8
    )
    
    
    (517
    )
    
    
    307Contract termination income
    
    
    
    
    
    
    18,199
    
    
    
    Total other income   net
    
    
    1,623
    
    
    
    25,437
    
    
    
    16,597INTEREST CHARGES:Interest on long-term debt
    
    
    42,290
    
    
    
    46,828
    
    
    
    43,649Other interest
    
    
    5,571
    
    
    
    5,585
    
    
    
    3,824Allowance for borrowed funds used
during construction
    
    
    (431
    )
    
    
    (1,306
    )
    
    
    (4,557
    )Total interest charges
    
    
    47,430
    
    
    
    51,107
    
    
    
    42,916INCOME BEFORE INCOME TAXES
    
    
    155,371
    
    
    
    185,059
    
    
    
    85,668PROVISION (BENEFIT) FOR INCOME TAXES (Note
6)
    
    
    
    
    
    
    (254,667
    )
    
    
    31,206NET INCOME
    
    $
    155,371
    
    
    $
    439,726
    
    
    $
    54,462CASH DISTRIBUTIONS/DIVIDENDS
    
    $
    419,342
    
    
    $
    109,770
    
    
    $
    
  40




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##### Table of Contents



NORTHWEST PIPELINE GP
 
 CONSOLIDATED BALANCE SHEETS
  December 31,2008
    
    
    2007ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    345
    
    
    $
    497Advances to affiliate
    
    
    65,977
    
    
    
    39,072Accounts receivable Trade, less reserves of $0 for 2008 and $7 for 2007
    
    
    40,116
    
    
    
    40,689Affiliated companies
    
    
    1,230
    
    
    
    3,514Materials and supplies, less reserves of $111 for 2008 and $181
for 2007
    
    
    9,817
    
    
    
    10,344Exchange gas due from others
    
    
    17,000
    
    
    
    10,155Exchange gas offset
    
    
    
    
    
    
    6,593Prepayments and other
    
    
    5,985
    
    
    
    6,928Total current assets
    
    
    140,470
    
    
    
    117,792PROPERTY, PLANT AND EQUIPMENT, at cost
    
    
    2,765,520
    
    
    
    2,706,691Less  Accumulated depreciation
    
    
    901,613
    
    
    
    864,999Total property, plant and equipment, net
    
    
    1,863,907
    
    
    
    1,841,692OTHER ASSETS:Deferred charges
    
    
    22,213
    
    
    
    44,915Regulatory assets
    
    
    55,582
    
    
    
    52,072Total other assets
    
    
    77,795
    
    
    
    96,987Total assets
    
    $
    2,082,172
    
    
    $
    2,056,471
  41




---



##### Table of Contents



NORTHWEST PIPELINE GP
 CONSOLIDATED BALANCE SHEETS
  December 31,2008
    
    
    2007LIABILITIES AND OWNERS EQUITYCURRENT LIABILITIES:Accounts payable Trade
    
    $
    12,172
    
    
    $
    32,055Affiliated companies
    
    
    6,484
    
    
    
    13,056Accrued liabilities Taxes, other than income taxes
    
    
    10,019
    
    
    
    7,935Interest
    
    
    4,045
    
    
    
    4,517Employee costs
    
    
    10,505
    
    
    
    12,106Exchange gas due to others
    
    
    12,165
    
    
    
    16,748Exchange gas offset
    
    
    4,835
    
    
    
    Other
    
    
    8,784
    
    
    
    5,713Total current liabilities
    
    
    69,009
    
    
    
    92,130LONG-TERM DEBT
    
    
    693,240
    
    
    
    693,736DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES
    
    
    135,209
    
    
    
    84,989CONTINGENT LIABILITIES AND COMMITMENTSOWNERS EQUITY:Owners capital
    
    
    978,682
    
    
    
    977,022Retained earnings
    
    
    265,668
    
    
    
    228,739Accumulated other comprehensive loss
    
    
    (59,636
    )
    
    
    (20,145
    )Total owners equity
    
    
    1,184,714
    
    
    
    1,185,616Total liabilities and owners equity
    
    $
    2,082,172
    
    
    $
    2,056,471
  42




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##### Table of Contents



NORTHWEST PIPELINE GP
 
 CONSOLIDATED STATEMENTS OF OWNERS EQUITY
 Years Ended December 31,2008
    
    
    2007
    
    
    2006Common stock, par value $1 per share,
authorized, 1,000 sharesBalance at beginning of period, outstanding,
1,000 shares for 2007 and 2006
    
    $
    
    
    
    $
    1
    
    
    $
    1Conversion to GP
    
    
    
    
    
    
    (1
    )
    
    
    Balance at end of period
    
    
    
    
    
    
    
    
    
    
    1Additional paid-in capital Balance at beginning of period
    
    
    
    
    
    
    977,021
    
    
    
    912,021Capital contribution from parent
    
    
    
    
    
    
    
    
    
    
    65,000Conversion to GP
    
    
    
    
    
    
    (977,021
    )
    
    
    Balance at end of period
    
    
    
    
    
    
    
    
    
    
    977,021Partners capital Balance at beginning of period
    
    
    977,022
    
    
    
    
    
    
    
    Capital contribution from partner
    
    
    1,660
    
    
    
    
    
    
    
    Conversion to GP
    
    
    
    
    
    
    977,022
    
    
    
    Balance at end of period
    
    
    978,682
    
    
    
    977,022
    
    
    
    Retained earnings (deficit) Balance at beginning of period
    
    
    228,739
    
    
    
    (101,214
    )
    
    
    (155,676
    )Net income
    
    
    155,371
    
    
    
    439,726
    
    
    
    54,462Cash distributions
    
    
    (419,342
    )
    
    
    (109,770
    )
    
    
    Sale of partnership interest
    
    
    300,900
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    (3
    )
    
    
    Balance at end of period
    
    
    265,668
    
    
    
    228,739
    
    
    
    (101,214
    )Accumulated other comprehensive loss Balance at beginning of period
    
    
    (20,145
    )
    
    
    (17,863
    )
    
    
    Cash flow hedges:Gain, net of tax of ($233) for 2006
    
    
    
    
    
    
    
    
    
    
    386Reclassification of gain into earnings, net of tax
of $13 for 2006
    
    
    (61
    )
    
    
    (62
    )
    
    
    (21
    )Pension benefits:Adjustment to initially apply SFAS No. 158:Prior service cost, net of tax of $186 for 2006
    
    
    
    
    
    
    
    
    
    
    (308
    )Net actuarial loss, net of tax of $10,797 for
2006
    
    
    
    
    
    
    
    
    
    
    (17,920
    )Net actuarial gain (loss)
    
    
    (39,509
    )
    
    
    8,466
    
    
    
    Prior service cost
    
    
    79
    
    
    
    77
    
    
    
    Elimination of deferred income taxes
    
    
    
    
    
    
    (10,763
    )
    
    
    Balance at end of period
    
    
    (59,636
    )
    
    
    (20,145
    )
    
    
    (17,863
    )Total owners equity
    
    $
    1,184,714
    
    
    $
    1,185,616
    
    
    $
    857,945
  43




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##### Table of Contents



NORTHWEST PIPELINE GP
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
  Years Ended December 31,2008
    
    
    2007
    
    
    2006Net Income
    
    $
    155,371
    
    
    $
    439,726
    
    
    $
    54,462Cash Flow Hedges:Gain on cash flow hedges, net of tax of
($233) for 2006
    
    
    
    
    
    
    
    
    
    
    386Amortization of cash flow hedges, net of tax of
$13 for 2006
    
    
    (61
    )
    
    
    (62
    )
    
    
    (21
    )Pension Benefits:Amortization of prior service cost
    
    
    79
    
    
    
    77
    
    
    
    Amortization of net actuarial loss
    
    
    1,423
    
    
    
    1,913
    
    
    
    Net actuarial gain (loss) arising during the period
    
    
    (40,932
    )
    
    
    6,553
    
    
    
    Elimination of deferred income taxes
    
    
    
    
    
    
    (10,763
    )
    
    
    Total comprehensive income
    
    $
    115,880
    
    
    $
    437,444
    
    
    $
    54,827
  44




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##### Table of Contents



NORTHWEST PIPELINE GP
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,2008
    
    
    2007
    
    
    2006OPERATING ACTIVITIES:Net Income
    
    $
    155,371
    
    
    $
    439,726
    
    
    $
    54,462Adjustments to reconcile to net cash provided by
operating activities Depreciation
    
    
    86,184
    
    
    
    84,731
    
    
    
    79,488Regulatory credits
    
    
    (2,617
    )
    
    
    (3,663
    )
    
    
    (4,469
    )Provision (benefit) for deferred income taxes
    
    
    
    
    
    
    (289,229
    )
    
    
    27,916Amortization of deferred charges and credits
    
    
    8,589
    
    
    
    9,783
    
    
    
    2,484Allowance for equity funds used during construction
    
    
    (812
    )
    
    
    (2,091
    )
    
    
    (8,947
    )Reserve for doubtful accounts
    
    
    (7
    )
    
    
    (46
    )
    
    
    (38
    )Regulatory liability reversal
    
    
    
    
    
    
    (16,562
    )
    
    
    Contract termination income
    
    
    
    
    
    
    (6,045
    )
    
    
    Cash provided (used) by changes in operating assets
and liabilities:Trade accounts receivable
    
    
    580
    
    
    
    (8,413
    )
    
    
    (3,515
    )Affiliated receivables, including income taxes in
2007 and 2006
    
    
    2,284
    
    
    
    (2,923
    )
    
    
    4,899Exchange gas due from others
    
    
    4,583
    
    
    
    (1,654
    )
    
    
    5,549Materials and supplies
    
    
    527
    
    
    
    (331
    )
    
    
    (1,912
    )Other current assets
    
    
    943
    
    
    
    1,017
    
    
    
    (5,264
    )Deferred charges
    
    
    (423
    )
    
    
    (9,769
    )
    
    
    (1,610
    )Trade accounts payable
    
    
    (2,599
    )
    
    
    4,653
    
    
    
    (2,011
    )Affiliated payables, including income taxes in 2007
and 2006
    
    
    (6,572
    )
    
    
    (5,259
    )
    
    
    13,037Exchange gas due to others
    
    
    (4,583
    )
    
    
    1,654
    
    
    
    (5,549
    )Other accrued liabilities
    
    
    3,082
    
    
    
    2,105
    
    
    
    1,192Other deferred credits
    
    
    (5,139
    )
    
    
    7,673
    
    
    
    4,095Other
    
    
    (377
    )
    
    
    
    
    
    
    Net cash provided by operating activities
    
    
    239,014
    
    
    
    205,357
    
    
    
    159,807FINANCING ACTIVITIES:Proceeds from issuance of long-term debt
    
    
    249,333
    
    
    
    434,362
    
    
    
    174,447Retirement of long-term debt
    
    
    (250,000
    )
    
    
    (252,867
    )
    
    
    (7,500
    )Early retirement of long-term debt
    
    
    
    
    
    
    (175,000
    )
    
    
    Debt issuance costs
    
    
    (2,027
    )
    
    
    (2,059
    )
    
    
    (2,375
    )Premium on early retirement of long-term debt
    
    
    
    
    
    
    (7,111
    )
    
    
    Capital contribution from parent
    
    
    1,660
    
    
    
    
    
    
    
    65,000Proceeds from sale of partnership interest
    
    
    300,900
    
    
    
    
    
    
    
    Distributions paid
    
    
    (419,342
    )
    
    
    (109,770
    )
    
    
    Changes in cash overdrafts
    
    
    (7,372
    )
    
    
    (30,078
    )
    
    
    37,347Net cash provided by (used in) financing activities
    
    
    (126,848
    )
    
    
    (142,523
    )
    
    
    266,919INVESTING ACTIVITIES:Property, plant and equipment Capital expenditures
    
    
    (78,566
    )
    
    
    (157,163
    )
    
    
    (473,566
    )Proceeds from sales
    
    
    3,065
    
    
    
    2,257
    
    
    
    Asset removal cost
    
    
    
    
    
    
    
    
    
    
    (9,733
    )Changes in accounts payable and accrued liabilities
    
    
    (9,912
    )
    
    
    402
    
    
    
    (5,015
    )Proceeds from contract termination payments
    
    
    
    
    
    
    
    
    
    
    3,348Proceeds from sale of Parachute facilities
    
    
    
    
    
    
    79,770
    
    
    
    Repayments from (advances to) affiliates
    
    
    (26,905
    )
    
    
    10,908
    
    
    
    20Net cash used in investing activities
    
    
    (112,318
    )
    
    
    (63,826
    )
    
    
    (484,946
    )NET DECREASE IN CASH AND CASH
EQUIVALENTS
    
    
    (152
    )
    
    
    (992
    )
    
    
    (58,220
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF
YEAR
    
    
    497
    
    
    
    1,489
    
    
    
    59,709CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    345
    
    
    $
    497
    
    
    $
    1,489
  45




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##### Table of Contents



NORTHWEST PIPELINE GP
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Corporate Structure and Control
     Nature of Operations
  Regulatory Accounting
  46




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##### Table of Contents



NORTHWEST PIPELINE GP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Accounting for the Effects of
Certain Types of Regulation,
 Basis of Presentation
   Use of Estimates
   Property, Plant and Equipment
    47




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##### Table of Contents



NORTHWEST PIPELINE GP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     Allowance for Borrowed and Equity Funds Used During Construction
   Regulatory Allowance for Equity Funds Used During Construction
  Advances to Affiliates
  48




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##### Table of Contents



NORTHWEST PIPELINE GP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Accounts Receivable and Allowance for Doubtful Receivables
  Materials and Supplies Inventory
   Impairment of Long-Lived Assets
   Income Taxes
   Deferred Charges
  49




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##### Table of Contents



NORTHWEST PIPELINE GP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Cash and Cash Equivalents
  Revenue Recognition
    Environmental Matters
  Interest Payments
  Recent Accounting Standards
  50




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##### Table of Contents



NORTHWEST PIPELINE GP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Change in Accounting Estimate
  Reclassifications and Adjustments
   2. RATE AND REGULATORY MATTERS
 Parachute Lateral Project
   51




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##### Table of Contents



NORTHWEST PIPELINE GP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  3. CONTINGENT LIABILITIES AND COMMITMENTS
 Legal Proceedings
  Environmental Matters
    52




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##### Table of Contents



NORTHWEST PIPELINE GP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Safety Matters
 Pipeline Integrity Regulations
 Other Matters
  Summary
  Other Commitments
  Cash Distributions to Partners
   53




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##### Table of Contents



NORTHWEST PIPELINE GP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 4. DEBT, FINANCING ARRANGEMENTS AND LEASES
 Debt Covenants
  Long-Term Debt
      December 31,2008
    
    
    2007(Thousands of Dollars)5.95%, payable 2017
    
    $
    184,471
    
    
    $
    184,4076.05%, payable 2018
    
    
    249,374
    
    
    
    7%, payable 2016
    
    
    174,587
    
    
    
    174,5327.125%, payable 2025
    
    
    84,808
    
    
    
    84,797Revolving credit debt, payable 2012
    
    
    
    
    
    
    250,000Total long-term debt
    
    $
    693,240
    
    
    $
    693,736
  54




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##### Table of Contents



NORTHWEST PIPELINE GP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Thousands ofDollars)2009
    
    $
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    Thereafter
    
    
    695,000Total
    
    $
    695,000
 Line-of-Credit Arrangements
    
    
    Williams ratio of debt to capitalization must be no greater than 65 percent. Williams
was in compliance with this covenant at December 31, 2008.
    
    Our ratio of debt to capitalization and that of another participating subsidiary of
Williams must be no greater than 55 percent. We were in compliance with this covenant at
December 31,2008.
 Leases
    55




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##### Table of Contents



NORTHWEST PIPELINE GP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Thousandsof Dollars)2009
    
    $
    6,3692010
    
    
    3,7492011
    
    
    3,7492012
    
    
    3,7492013
    
    
    3,74921,365Less: noncancelable
subleases
    
    
    2,819Total
    
    $
    18,546
   5. EMPLOYEE BENEFIT PLANS
 Pension plans
   56




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##### Table of Contents



NORTHWEST PIPELINE GP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Pension Benefits2008
    
    2007(Thousands of Dollars)Amounts not yet recognized in net periodic
benefit expense:Prior service cost
    
    $
    (339
    )
    
    $
    (417
    )Net actuarial losses
    
    
    (59,759
    )
    
    
    (20,251
    )
  Postretirement benefits other than pensions
   Defined contribution plan
  Stock-Based Compensation
      57




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##### Table of Contents



NORTHWEST PIPELINE GP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  6. INCOME TAXES
   Year Ended December 31,2008
    
    
    2007
    
    
    2006(Thousands of Dollars)Current:Federal
    
    $
    
    
    
    $
    30,888
    
    
    $
    2,940State
    
    
    
    
    
    
    3,674
    
    
    
    350
    
    
    
    34,562
    
    
    
    3,290Deferred:Federal
    
    
    
    
    
    
    (258,459
    )
    
    
    24,945State
    
    
    
    
    
    
    (30,770
    )
    
    
    2,971
    
    
    
    (289,229
    )
    
    
    27,916Total provision (benefit)
    
    $
    
    
    
    $
    (254,667
    )
    
    $
    31,206
 58




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NORTHWEST PIPELINE GP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year Ended December 31,2008
    
    
    2007
    
    
    2006(Thousands of Dollars)Provision at statutory Federal income tax
rate of 35 percent (1)
    
    $
    
    
    
    $
    52,831
    
    
    $
    29,984Increase (decrease) in tax provision resulting from -
State income taxes net of Federal tax benefit
    
    
    
    
    
    
    3,948
    
    
    
    2,159Book/tax basis reconciliation adjustment
    
    
    
    
    
    
    
    
    
    
    (723
    )Other  net
    
    
    
    
    
    
    330
    
    
    
    (214
    )Provision for income taxes prior to conversion from
a corporation to a partnership
    
    $
    
    
    
    $
    57,109
    
    
    $
    31,206Effective tax rate prior to conversion from a corporation
to a partnership
    
    
    
    
    
    
    37.83
    %
    
    
    36.43
    %Provision for income taxes prior to conversion from a
corporation to a partnership
    
    $
    
    
    
    $
    57,109
    
    
    $
    31,206Conversion from corporation to partnership
    
    
    
    
    
    
    (311,776
    )
    
    
    Total provision (benefit) for income taxes
    
    $
    
    
    
    $
    (254,667
    )
    
    $
    31,206
 
 (1)
    
    Following our conversion to a general partnership on October 1, 2007, we are no longer
subject to income tax. The provision for income taxes shown herein for 2007 reflects the
provision through September 30, 2007. Subsequent to the conversion to a general partnership
on October 1, 2007, all deferred income taxes were eliminated and we no longer provide for
income taxes.   7. FINANCIAL INSTRUMENTS
 Disclosures About the Fair Value of Financial Instruments
  Cash, cash equivalents and advances to affiliate
 59




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NORTHWEST PIPELINE GP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Long-term debt
 8. TRANSACTIONS WITH MAJOR CUSTOMERS AND AFFILIATES
 Concentration of Off-Balance-Sheet and Other Credit Risk
  Year Ended December 31,2008
    
    2007
    
    2006(Thousands of Dollars)Puget Sound Energy, Inc.
    
    $
    89,988
    
    
    $
    85,059
    
    
    $
    64,428Northwest Natural Gas Co.
    
    
    (a)
    
    
    
    48,648
    
    
    
    35,242
 
 (a)
    
    Under 10 percent in 2008  Related Party Transactions
    60




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##### Table of Contents



NORTHWEST PIPELINE GP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   9. ASSET RETIREMENT OBLIGATIONS
   2008
    
    
    2007Beginning balance
    
    $
    50,423
    
    
    $
    48,020Accretion
    
    
    4,341
    
    
    
    3,673New obligations
    
    
    116
    
    
    
    1,912Obligations transferred
to an affiliate
    
    
    
    
    
    
    (1,996
    )Changes in estimates
of existing obligations
    
    
    27,790
    
    
    
    (1,186
    )Obligation settled
    
    
    (4
    )
    
    
    Ending Balance
    
    $
    82,666
    
    
    $
    50,423
  10. REGULATORY ASSETS AND LIABILITIES
  61




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NORTHWEST PIPELINE GP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 2008
    
    
    2007(Thousands of Dollars)Current regulatory assets  environmental
costs
    
    $
    2,200
    
    
    $
    2,200Non-current regulatory assetsEnvironmental costs
    
    
    5,790
    
    
    
    4,841Grossed-up deferred taxes on
equity funds used during
construction
    
    
    19,234
    
    
    
    20,122Levelized incremental depreciation
    
    
    28,397
    
    
    
    25,780Asset retirement obligations, net
    
    
    1,189
    
    
    
    Other post-employment benefits
    
    
    972
    
    
    
    1,329Total non-current regulatory assets
    
    
    55,582
    
    
    
    52,072Total regulatory assets
    
    $
    57,782
    
    
    $
    54,272Non-current regulatory liabilitiesAsset retirement obligations, net
    
    
    
    
    
    
    10Postretirement benefits
    
    
    2,888
    
    
    
    17,806Total regulatory liabilities
    
    $
    2,888
    
    
    $
    17,816
 11. ACCUMULATED OTHER COMPREHENSIVE LOSS
  2008
    
    
    2007(Thousands of Dollars)Cash flow hedges
    
    $
    462
    
    
    $
    523Pension benefits
    
    
    (60,098
    )
    
    
    (20,668
    )Accumulated other comprehensive loss before
taxes
    
    
    (59,636
    )
    
    
    (20,145
    )Deferred income taxes
    
    
    
    
    
    
    Total accumulated other comprehensive loss
    
    $
    (59,636
    )
    
    $
    (20,145
    )
 62




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NORTHWEST PIPELINE GP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 12. QUARTERLY INFORMATION (UNAUDITED)
  Quarter of 2008First
    
    Second
    
    Third
    
    Fourth(Thousands of Dollars)Operating revenues
    
    $
    107,405
    
    
    $
    106,450
    
    
    $
    108,542
    
    
    $
    112,457Operating income
    
    
    49,166
    
    
    
    46,676
    
    
    
    53,042
    
    
    
    52,294Net income
    
    
    38,158
    
    
    
    35,685
    
    
    
    41,236
    
    
    
    40,292
 Quarter of 2007First
    
    Second
    
    Third
    
    Fourth(Thousands of Dollars)Operating revenues
    
    $
    103,043
    
    
    $
    102,655
    
    
    $
    106,364
    
    
    $
    109,789Operating income
    
    
    49,317
    
    
    
    64,456
    
    
    
    49,980
    
    
    
    46,976Net income
    
    
    23,357
    
    
    
    37,387
    
    
    
    33,092
    
    
    
    345,890
  63




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Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 Item 9A(T). CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
   Managements Annual Report on Internal Control over Financial Reporting
  Changes in Internal Controls Over Financial Reporting
  
 Item 9B. OTHER INFORMATION
  64




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PART III
 
 Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 Management Committee Member and Executive Officers
   Name
    
    Age
    
    PositionPhillip D. Wright
    
    
    53
    
    
    Senior Vice President and
Management Committee MemberDonald R. Chappel
    
    
    57
    
    
    Management Committee MemberSteven J. Malcolm
    
    
    60
    
    
    Chief Executive OfficerRichard D. Rodekohr
    
    
    50
    
    
    Vice President and TreasurerAllison G. Bridges
    
    
    49
    
    
    Vice PresidentRandall L. Barnard
    
    
    50
    
    
    Vice PresidentLawrence G. Hjalmarson
    
    
    54
    
    
    Vice PresidentRandall R. Conklin
    
    
    52
    
    
    Vice President and General CounselFrank J. Ferazzi
    
    
    52
    
    
    Vice President
       65




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##### Table of Contents



Section 16(a) Beneficial Ownership Reporting Compliance
  Code of Ethics
  Corporate Governance
  
 Item 11. EXECUTIVE COMPENSATION
 Compensation Discussion and Analysis
 http://www.sec.gov http://www.williams.com
 66




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##### Table of Contents



Executive Compensation
  2008 Summary Compensation Table
 Change inPension ValueandNonqualifiedNon-Equity
    
    DeferredStock
    
    Option
    
    Incentive Plan
    
    Compensation
    
    All OtherName
    
    Year
    
    Salary
    
    Bonus
    
    Awards
    
    Awards
    
    Compensation
    
    Earnings
    
    Compensation
    
    TotalPhillip D. Wright
    
    
    2008
    
    
    $
    130,579
    
    
    $
    
    
    
    $
    (21,196
    )
    
    $
    84,665
    
    
    $
    146,250
    
    
    $
    100,148
    
    
    $
    2,626
    
    
    $
    443,072Senior Vice President
    
    
    2007
    
    
    
    92,681
    
    
    
    
    
    
    
    408,204
    
    
    
    66,898
    
    
    
    129,929
    
    
    
    13,203
    
    
    
    1,902
    
    
    
    712,817(Principal Executive Officer)
    
    
    2006
    
    
    
    98,253
    
    
    
    
    
    
    
    198,649
    
    
    
    57,690
    
    
    
    138,718
    
    
    
    31,480
    
    
    
    2,045
    
    
    
    526,835Richard D, Rodekohr
    
    
    2008
    
    
    
    53,474
    
    
    
    
    
    
    
    14,028
    
    
    
    21,662
    
    
    
    35,696
    
    
    
    40,088
    
    
    
    3,396
    
    
    
    168,344Vice President and Treasurer
    
    
    2007
    
    
    
    44,358
    
    
    
    
    
    
    
    100,495
    
    
    
    22,953
    
    
    
    36,913
    
    
    
    (121
    )
    
    
    2,966
    
    
    
    207,564(Principal Financial Officer)
    
    
    2006
    
    
    
    44,959
    
    
    
    
    
    
    
    49,113
    
    
    
    24,130
    
    
    
    37,572
    
    
    
    11,183
    
    
    
    3,035
    
    
    
    169,992Allison G. Bridges
    
    
    2008
    
    
    
    248,500
    
    
    
    
    
    
    
    12,850
    
    
    
    94,020
    
    
    
    196,013
    
    
    
    217,251
    
    
    
    11,905
    
    
    
    780,539Vice President
    
    
    2007
    
    
    
    235,211
    
    
    
    
    
    
    
    421,027
    
    
    
    95,960
    
    
    
    196,919
    
    
    
    1,832
    
    
    
    13,895
    
    
    
    964,8442006
    
    
    
    220,250
    
    
    
    
    
    
    
    214,121
    
    
    
    100,127
    
    
    
    188,896
    
    
    
    54,318
    
    
    
    13,535
    
    
    
    791,247Randall L. Barnard
    
    
    2008
    
    
    
    32,038
    
    
    
    
    
    
    
    1,318
    
    
    
    12,783
    
    
    
    28,739
    
    
    
    23,379
    
    
    
    1,529
    
    
    
    99,786Vice President
    
    
    2007
    
    
    
    72,584
    
    
    
    
    
    
    
    142,715
    
    
    
    33,037
    
    
    
    76,975
    
    
    
    3,091
    
    
    
    3,644
    
    
    
    332,0462006
    
    
    
    50,805
    
    
    
    
    
    
    
    69,122
    
    
    
    32,998
    
    
    
    55,295
    
    
    
    14,136
    
    
    
    2,656
    
    
    
    225,012Lawrence G. Hjalmarson
    
    
    2008
    
    
    
    10,823
    
    
    
    
    
    
    
    2,563
    
    
    
    5,729
    
    
    
    7,098
    
    
    
    6,573
    
    
    
    606
    
    
    
    33,392Vice President
    
    
    2007
    
    
    
    68,301
    
    
    
    
    
    
    
    16,427
    
    
    
    22,957
    
    
    
    51,332
    
    
    
    1,345
    
    
    
    5,009
    
    
    
    165,3712006
    
    
    
    159,450
    
    
    
    
    
    
    
    5,753
    
    
    
    46,843
    
    
    
    86,974
    
    
    
    39,549
    
    
    
    13,200
    
    
    
    351,769
 Compensation Committee Interlocks and Insider Participation
  Compensation of Directors
  Compensation Committee Report
  
 67




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Item 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
  
 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
     
    
    the liquidation, dissolution or winding up of Northwest or making any bankruptcy
filing;
    
    the issuance, incurrence, assumption or guarantee of any indebtedness or the
pledge of any of Northwests assets;
    
    filing or resolving a Section 4 general rate case proceeding under the Natural
Gas Act or any other proceeding or controversy at FERC or an appeal of a FERC
order, the outcome of which would cause (A) Northwest to have reduced revenue of,
or pay penalties, refunds or interest in excess of, $50 million, or (B) Northwest
to agree to any criminal penalty;
    
    any amendment of the Northwest partnership agreement;
    
    any distributions to Northwests partners, other than the distributions of
available cash to be made at least quarterly as described below;
    
    the admission of any person as a partner (other than a permitted transferee of a
partner) or the issuance of any partnership interests or other equity interests of
Northwest or any withdrawal by any partner from Northwest;
    
    the transfer, redemption, repurchase or other acquisition of interests in
Northwest;
    
    the disposition of substantially all of the assets of Northwest or any portion
of such assets with a value exceeding $20 million;
    
    any merger or consolidation of Northwest with another person or any conversion
or reorganization of Northwest;
    
    entering into any activity or business that may generate income that may not be
qualifying income under Section 7704 of the Internal Revenue Code;
    
    the approval of Northwests budget;
    
    the approval of a transfer by a partner of its interest in Northwest; and
 68




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##### Table of Contents




    
    any amendment to the administrative services agreement to which Northwest is a
party.
 Quarterly Cash Distributions
 plus less
 Capital Calls to the Partners
  Restrictions on Transfer of Interests in Northwest
  Profit and Loss Allocations
  Agreement with Regard to Colorado Hub Connection Project
  Williams Cash Management Program
  Other Related Party Transactions
  69




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Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  2008
    
    
    2007(Thousands of Dollars)Audit Fees
    
    $
    1,038
    
    
    $
    1,124Audit-Related Fees
    
    
    
    
    
    
    Tax Fees
    
    
    
    
    
    
    All Other Fees
    
    
    
    
    
    
    $
    1,038
    
    
    $
    1,124
  http://www.sec.gov http://williams.com
 70




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PART IV
 
 Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a) 1. Financial Statements
 Index
 PageReferenceto 2008Form 10-KManagements Annual Report on Internal Control over Financial Reporting
    
    
    38Report of Independent Registered Public Accounting Firm
    
    
    39Consolidated
Statements of Income for the Years Ended December 31, 2008, 2007 and 2006
    
    
    40Consolidated Balance Sheets at December 31, 2008 and 2007
    
    
    41Consolidated
Statements of Owners Equity for the Years Ended December 31, 2008, 2007 and 2006
    
    
    43Consolidated
Statements of Comprehensive Income for the Years Ended December 31, 2008, 2007 and 2006
    
    
    44Consolidated
Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006
    
    
    45Notes to Consolidated Financial Statements
    
    
    46
 71




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##### Table of Contents



(a) 2. Financial Statement Schedules
 
 Charged toBeginning
    
    Costs and
    
    
    
    
    
    EndingDescription
    
    Balance
    
    Expenses
    
    Deductions
    
    BalancesYear ended December 31, 2008:Reserve for doubtful receivables
    
    $
    7
    
    
    $
    (7
    )
    
    $
    0
    
    
    $
    0Reserve for obsolescence of
materials and supplies
    
    
    181
    
    
    
    141
    
    
    
    (211
    )
    
    
    111Year ended December 31, 2007:Reserve for doubtful receivables
    
    
    53
    
    
    
    (46
    )
    
    
    0
    
    
    
    7Reserve for obsolescence of
materials and supplies
    
    
    472
    
    
    
    104
    
    
    
    (395
    )
    
    
    181Year ended December 31, 2006:Reserve for doubtful receivables
    
    
    91
    
    
    
    (38
    )
    
    
    0
    
    
    
    53Reserve for obsolescence of
materials and supplies
    
    
    263
    
    
    
    306
    
    
    
    (97
    )
    
    
    472
  (a) 3 and b. 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 Northwest report on Form 10-K, No. 1-7414, filed March 22,
1984).*(c)
    
    Certificate of Conversion of Northwest Pipeline Corporation (Exhibit 2.1 to
Northwest report on Form 8-K, No. 1-7414, filed October 2, 2007).
 (3)
    
    Articles of incorporation and by-laws:
 *(a)
    
    Statement of Partnership Existence of Northwest Pipeline GP (Exhibit 3.1 to
Northwest report on Form 8-K, No. 1-7414, filed October 2, 2007).*(b)
    
    Amended and Restated General Partnership Agreement of Northwest Pipeline GP
(Exhibit 3.1 to Northwest report on Form 8-K, No. 1-7414, filed January 30, 2008).
 (4)
    
    Instruments defining the rights of security holders, including indentures:
 *(a)
    
    Senior Indenture, dated as of November 30, 1995 between Northwest 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).*(b)
    
    Indenture, dated as of June 22, 2006, between Northwest Pipeline Corporation and
JPMorgan Chase Bank, N.A. (Exhibit 4.1 to Northwest report on Form 8-K, No. 1-7414,
filed June 23, 2006).
 72




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##### Table of Contents



*(c)
    
    Indenture, dated as of April 5, 2007, between Northwest Pipeline Corporation and
The Bank of New York (Exhibit 4.1 to Northwest report on Form 8-K, No. 1-7414, filed
April 6, 2007).*(d)
    
    Indenture, dated May 22, 2008, between Northwest Pipeline GP and The Bank of New
York Trust Company, N.A., as Trustee (filed as exhibit 4.1 to Northwest Pipeline GPs
Form 8-K, filed May 23, 2008).
 (10)
    
    Material contracts:
 (a)     *(1)
    
    Form of Transfer Agreement, dated July 1, 1991, between Northwest 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 Northwest and
Williams Field Services Company (Exhibit 10(c)(9) to Pipeline Report on Form 10-K,
No. 1-7414, filed March 26, 1992).*(3)
    
    Credit Agreement, dated as of May 1, 2006, among The Williams
Companies, Inc., Northwest Pipeline Corporation, Transcontinental Gas
Pipe Line Corporation, and Williams Partners L.P., as Borrowers, and
Citibank, N.A., as Administrative Agent (Exhibit 10.1 to The Williams
Companies, Inc. Form 8-K filed May 1, 2006 Commission File Number
1-4174).*(4)
    
    Amendment Agreement, dated May 9, 2007, among The Williams Companies,
Inc., Williams Partners L.P., Northwest Pipeline Corporation,
Transcontinental Gas Pipe Line Corporation, certain banks, financial
institutions and other institutional lenders and Citibank, N.A., as
administrative agent (Exhibit 10.1 to The Williams Companies, Inc.
report on Form 8-K filed May 15, 2007, Commission File Number
1-4174).*(5)
    
    Amendment Agreement dated November 21, 2007, among The Williams
Companies, Inc., Williams Partners L.P., Northwest Pipeline GP,
Transcontinental Gas Pipe Line Corporation, certain banks, financial
institutions and other institutional lenders and Citibank, N.A., as
administrative agent (Exhibit 10.1 to the Williams Companies, Inc.,
Form 8-K, filed November 28, 2007, Commission File Number 1-4174).*(6)
    
    Administrative Services Agreement, dated January 24, 2008, between
Northwest Pipeline GP and Northwest Pipeline Services, LLC (Exhibit
10.1 to Northwest report on Form 8-K, No. 1-7414, filed January 30,
2008).*(7)
    
    Contribution, Conveyance and Assumption Agreement, dated January 24,
2008, among Williams Pipeline Partners L.P., Williams Pipeline
Operating LLC, WPP Merger LLC, Williams Pipeline Partners Holdings
LLC, Northwest Pipeline GP, Williams Pipeline GP LLC, Williams Gas
Pipeline Company, LLC, WGPC Holdings LLC and Williams Pipeline
Services Company (Exhibit 10.2 to Northwest report on Form 8-K, No.
1-7414, filed January 30, 2008).*(8)
    
    Registration Rights Agreement, dated as of April 5, 2007, among
Northwest Pipeline Corporation and Greenwich Capital Markets, Inc.
and Banc of America Securities LLC, acting on behalf of themselves
and the several initial purchasers listed on Schedule I thereto
(Exhibit 10.1 to Northwest report on Form 8-K, No. 1-7414, filed
April 6, 2007).*(9)
    
    Registration Rights Agreement, dated as of May 22, 2008, among
Northwest Pipeline GP and Banc of America Securities LLC, BNP Paribas
Securities Corp., and Greenwich Capital Markets, Inc., acting on
behalf of themselves and the several initial purchasers listed on
Schedule I thereto (filed as Exhibit 10.1 to our Form 8-K, dated May
23, 2008).
 73




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(12)
    
    Computation of Ratio of Earnings to Fixed Charges(23)
    
    Consent of Independent Registered Public Accounting Firm(24)
    
    Power of Attorney(31)
    
    Section 302 Certifications
 (a)
    
    Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and
15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended and Item
601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of The Sarbanes-Oxley
Act of 2002.(b)
    
    Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and
15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item
601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of The Sarbanes-Oxley
Act of 2002.
 (32)
    
    Section 906 Certification
 (a)
    
    Certification of Principal Executive Officer and Principal Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 *
    
    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. 74




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SIGNATURES
  NORTHWEST PIPELINE GP
          
            (Registrant)By
    /s/ R. Rand ClarkR. Rand ClarkController   Signature
    
    Title/s/ Phillip D. Wright
         
Phillip D. Wright
    
    Senior Vice President and Management Committee Member
(Principal Executive Officer)/s/ Richard D. Rodekohr
         
Richard D. Rodekohr
    
    Vice President and Treasurer
(Principal Financial Officer)/s/ Allison G. Bridges
         
Allison G. Bridges
    
    Vice President/s/ R. Rand Clark
         

R. Rand Clark
    
    Controller (Principal Accounting Officer)/s/ Steven J. Malcolm*
         
Steven J. Malcolm
    
    Chief Executive Officer/s/ Donald R. Chappel*
         
Donald R. Chappel
    
    Management Committee Member* By /s/ R. Rand Clark

           
R. Rand ClarkAttorney-in-fact
  75




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##### Table of Contents



Exhibit
 12
    
    Computation of Ratio of Earnings to Fixed Charges23
    
    Consent of Independent Registered Public Accounting Firm24
    
    Power of Attorney31(a)
    
    Section 302 Certification of Principal Executive Officer31(b)
    
    Section 302 Certification of Principal Financial Officer32(a)
    
    Section 906 Certification of Principal Executive Officer and Principal Financial Officer