1324518--2/25/2010--Williams_Partners

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{investment, property, distribution}

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Risks Inherent in Our Business We may not have sufficient cash from operations to enable us to maintain current levels of cash distributions or to pay the minimum quarterly distribution following establishment of cash reserves and payment of fees and expenses, including payments to our general partner. We may not be able to grow or effectively manage our growth. Prices for natural gas liquids, natural gas and other commodities are volatile and this volatility could adversely affect our financial results, cash flows, access to capital and ability to maintain existing businesses. We might not be able to successfully manage the risks associated with selling and marketing products in the wholesale energy markets. Any decrease in NGL prices or a change in NGL prices relative to the price of natural gas could affect our processing, fractionation and storage businesses. The long-term financial condition of our natural gas transportation and midstream businesses is dependent on the continued availability of natural gas supplies in the supply basins that we access, demand for those supplies in our traditional markets, and the prices of and market demand for natural gas. Our risk measurement and hedging activities might not be effective and could increase the volatility of our results. Our industry is highly competitive, and increased competitive pressure could adversely affect our business and operating results. We are exposed to the credit risk of our customers, and our credit risk management may not be adequate to protect against such risk. The failure of counterparties to perform their contractual obligations could adversely affect our operating results, financial condition and cash available to make distributions. If third-party pipelines and other facilities interconnected to our pipelines and facilities become unavailable to transport natural gas and NGLs or to treat natural gas, our revenues and cash available to pay distributions could be adversely affected. Future disruptions in the global credit markets may make equity and debt markets less accessible, create a shortage in the availability of credit and lead to credit market volatility, which could disrupt our financing plans and limit our ability to grow. Adverse economic conditions could negatively affect our results of operations. Restrictions in our debt agreements and our leverage may affect our future financial and operating flexibility. Our debt agreements and Williams public indentures contain financial and operating restrictions that may limit our access to credit and affect our ability to operate our business. In addition, our ability to obtain credit in the future will be affected by Williams credit ratings. Our subsidiaries are not prohibited from incurring indebtedness by their organizational documents, which may affect our ability to make distributions to unitholders. A downgrade of our credit rating could impact our liquidity, access to capital and our costs of doing business, and maintaining credit ratings is under the control of independent third parties. We are subject to risks associated with climate change. Our assets and operations can be affected by weather and other natural phenomena. We depend on certain key customers and producers for a significant portion of our revenues and supply of natural gas and NGLs. If we lost any of these key customers or producers or contracted volumes, our revenues and cash available to pay distributions could decline. We do not own all of the interests in Partially Owned Entities, which could adversely affect our ability to operate and control these assets in a manner beneficial to us. The Partially Owned Entities may reduce their cash distributions to us in some situations. Significant prolonged changes in natural gas prices could affect supply and demand, cause a reduction in or termination of the long-term transportation and storage contracts or throughput on the Pipeline Entities systems, and adversely affect our cash available to make distributions. The Pipeline Entities natural gas sales, transportation and storage operations are subject to regulation by FERC, which could have an adverse impact on their ability to establish transportation and storage rates that would allow them to recover the full cost of operating their respective pipelines, including a reasonable rate of return. The Pipeline Entities could be subject to penalties and fines if they fail to comply with FERC regulations. The outcome of certain FERC proceedings involving FERC policy statements is uncertain and could affect the level of return on equity that the Pipeline Entities may be able to achieve in any future rate proceeding. The outcome of future rate cases to set the rates the Pipeline Entities can charge customers on their respective pipelines might result in rates that lower their return on the capital invested in those pipelines. The outcome of future rate cases will determine the amount of income taxes the Pipeline Entities will be allowed to recover. Legal and regulatory proceedings and investigations relating to the energy industry and capital markets have adversely affected the Pipeline Entities businesses and may continue to do so. Increased competition from alternative natural gas transportation and storage options and alternative fuel sources could have a significant financial impact on us. 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. Competitive pressures could lead to decreases in the volume of natural gas contracted or transported through the Pipeline Entities pipeline systems. Decreases in demand for natural gas could adversely affect our business. 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. Certain of the Pipeline Entities services are subject to long-term, fixed-price contracts that are not subject to adjustment, even if our cost to perform such services exceeds the revenues received from such contracts. Our operations are subject to operational hazards and unforeseen interruptions for which they may not be adequately insured. Some portions of our current pipeline infrastructure and other assets have been in use for many decades, which may adversely affect our business. Our operations are subject to governmental laws and regulations relating to the protection of the environment, which may expose us to significant costs and liabilities and could exceed current expectations. We do not insure against all potential losses and could be seriously harmed by unexpected liabilities or by the ability 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. Our operating results for certain segments of our business might fluctuate on a seasonal and quarterly basis. We do not operate all of our assets. This reliance on others to operate our assets and to provide other services could adversely affect our business and operating results. We do not own all of the land on which our pipelines and facilities are located, which could disrupt our operations. 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. 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. Acts of terrorism could have a material adverse effect on our financial condition, results of operations and cash flows. Risks Inherent in an Investment in Us We may not realize the anticipated benefits from the Dropdown. Williams did not seek a vote of its shareholders in connection with the Dropdown. If there is a determination that such a vote was required, the resulting consequences could impact us. We will have certain indemnification obligations in favor of Williams subsequent to the completion of the Williams controls our general partner, which has sole responsibility for conducting our business and managing our operations. Our general partner and its affiliates have conflicts of interest with us and limited fiduciary duties, and they may favor their own interests to the detriment of our unitholders. Our partnership agreement limits our general partner s fiduciary duties to unitholders and restricts the remedies available to unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty. Affiliates of our general partner, including Williams, may not be limited in their ability to compete with us. Williams is also not obligated to offer us the opportunity to acquire additional assets or businesses from it, which could limit our commercial activities or our ability to grow. In addition, all of the executive officers and certain of the directors of our general partner are also officers and/or directors of Williams, and these persons will also owe fiduciary duties to it. Holders of our common units have limited voting rights and are not entitled to elect our general partner or its directors, which could reduce the price at which the common units will trade. Cost reimbursements due to our general partner and its affiliates will reduce cash available to pay distributions to unitholders. Even if unitholders are dissatisfied, they have little ability to remove our general partner without its consent. We have a holding company structure in which our subsidiaries conduct our operations and own our operating assets, which may affect our ability to make payments on our debt obligations and distributions on our common units. Our allocation from Williams for costs for its defined benefit pension plans and other postretirement benefit plans are affected by factors beyond our and Williams control. The control of our general partner may be transferred to a third party without unitholder consent. We may issue additional common units without unitholder approval, which would dilute unitholder ownership interests. Common units held by Williams eligible for future sale may adversely affect the price of our common units. Our general partner has a limited call right that may require unitholders to sell their common units at an undesirable time or price. Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units. Your liability may not be limited if a court finds that unitholder action constitutes control of our business. Unitholders may have liability to repay distributions that were wrongfully distributed to them. Our tax treatment depends on our status as a partnership for federal income tax purposes, as well as our not being subject to a material amount of entity-level taxation by states and localities. If the Internal Revenue Service (IRS) were to treat us as a corporation or if we were to become subject to a material amount of entity-level taxation for state or local tax purposes, then our cash available for distribution to unitholders would be substantially reduced. The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis. We prorate our items of income, gain, loss and deduction between transferors and transferees of the common units each month based upon the ownership of the common units on the first day of each month, instead of on the basis of the date a particular common unit is transferred. An IRS contest of the federal income tax positions we take may adversely impact the market for the common units, and the costs of any contest will reduce our cash available for distribution to our unitholders and our general partner. Unitholders will be required to pay taxes on their share of our income even if unitholders do not receive any cash distributions from us. The tax gain or loss on the disposition of the common units could be different than expected. Tax-exempt entities and non-U.S. persons face unique tax issues from owning common units that may result in adverse tax consequences to them. We will treat each purchaser of common units as having the same tax benefits without regard to the actual common units purchased. The IRS may challenge this treatment, which could adversely affect the value of the common units. Unitholders will likely be subject to state and local taxes and return filing requirements as a result of investing in our common units.

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1324518--2/25/2010--Williams_Partners_L.P.