Boardwalk Pipeline’s contract types
Boardwalk Pipeline Partners (BWP) generates 92% of its revenue from firm contracts. The remaining 8% of revenue comes from interruptible contracts. The firm contract revenue comprises 80% capacity reservation charges and 12% utilization charges.
Boardwalk Pipeline’s counterparty exposure
Firm contracts protect BWP from declines in throughput volumes. However, even firm contracts might not be safe if a customer goes bankrupt. Boardwalk Pipeline Partners has significant counterparty exposure. Six of BWP’s top 50 customers don’t carry an investment-grade rating, and they “represent approximately 17% of the $1 billion of revenues.” We have to wait and see if there’s any improvement in BWP’s counterparty exposure in its Q2 earnings.