Northwest Natural Holding Company

11/05/2025 | Press release | Distributed by Public on 11/05/2025 12:35

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's assessment of NW Holdings' and NW Natural's financial condition, including the principal factors that affect results of operations. The discussion refers to the consolidated results for the three and nine months ended September 30, 2025 and 2024 of NW Holdings, the substantial majority of which consist of the operating results of NW Natural. When significant activity exists at NW Holdings that does not exist at NW Natural, additional disclosure has been provided. References in this discussion to "Notes" are to the Notes to Unaudited Consolidated Financial Statements in this report. A significant portion of the business results are seasonal in nature, and, as such, the results of operations for the three month period is not necessarily indicative of expected fiscal year results. Therefore, this discussion should be read in conjunction with NW Holdings' and NW Natural's 2024 Annual Report on Form 10-K, as applicable (2024 Form 10-K).
NW Natural's natural gas distribution activities are reported in the NWN Gas Utility segment, which was previously referred to as the natural gas distribution (NGD) segment prior to 2025, serving customers in Oregon and southwest Washington. The NWN Gas Utility segment also includes NWN Gas Reserves, which is a wholly-owned subsidiary of Energy Corp, the NWN Gas Utility portion of NW Natural's Mist storage facility in Oregon, and NW Natural RNG Holding Company, LLC, a holding company established to invest in the development and procurement of regulated renewable natural gas for NW Natural.
SiEnergy Gas Utility, which was acquired on January 7, 2025, is a regulated natural gas distribution utility and serves residential and commercial customers in the greater metropolitan areas of Houston, Dallas, and Austin, Texas. SiEnergy also includes a natural gas transmission utility serving customers in the greater metropolitan areas of Dallas and Austin, Texas. SiEnergy activities are reported in the SiEnergy Gas Utility segment.
NWN Water Utility is a regulated water and wastewater utility serving residential and commercial customers in Oregon, Washington, Idaho, Texas, and Arizona. The activities of NWN Water are reported in the NWN Water segment, which also includes non-regulated water and wastewater services businesses in Oregon, Washington and Idaho, and an equity method investment in Avion Water Company, Inc. In addition, NWN Water provides water services to communities throughout the Pacific Northwest and California.
Other activities for NW Holdings, aggregated and reported as NW Holdings Other, include NWN Renewables and its non-regulated renewable natural gas activities; NW Natural's interstate storage and asset management activities and appliance retail center; and NNG Financial's investment in Kelso-Beaver Pipeline (KB Pipeline), which is accounted for under the equity method. See Note 4 for further discussion of our business segments and other, as well as our direct and indirect wholly-owned subsidiaries.
NON-GAAP FINANCIAL MEASURES- Segment Earnings Per Share. In addition to presenting diluted earnings per share for NW Holdings, we present diluted earnings per share for each of our segments (Segment EPS), which is a non-GAAP financial measure. We calculate Segment EPS by dividing the net income of each of our segments calculated in accordance with GAAP by the number of diluted shares outstanding for NW Holdings. We use Segment EPS to analyze our financial performance because we believe it provides useful information to our investors, analysts and creditors in evaluating our financial condition and results of operations of each of our segments. We believe investors find Segment EPS to be a useful indicator of our performance.
Segment EPS should not be considered a substitute for, or superior to, diluted earnings per share or other measures calculated in accordance with GAAP. Moreover, Segment EPS has limitations in that it does not reflect all the items associated with the operations of the business as determined in accordance with GAAP. Other companies may calculate similarly titled non-GAAP financial measures differently than how such measures are calculated in this report, limiting the usefulness of those measures for comparative purposes. A reconciliation of Segment EPS to diluted earnings per share is provided below.
Three Months Ended September 30, Nine Months Ended September 30,
Diluted earnings per share 2025 2024 2025 2024
Total(1)
$ (0.73) $ (0.71) $ 1.36 $ 0.88
NWN Gas Utility(2)
(0.75) (0.79) 1.42 0.84
SiEnergy Gas Utility(2)
0.04 - 0.20 -
NWN Water Utility(2)
0.11 0.07 0.22 0.08
NW Holdings Other(2)
(0.13) 0.01 (0.48) (0.04)
(1) Total Diluted EPS is equal to the sum of Diluted EPS for NWN Gas Utility, SiEnergy, NWN Water and NW Holdings Other.
(2) Non-GAAP financial measure. See Non-GAAP Financial Measures--Segment Earnings Per Share for definition, reconciliation and additional information.
EXECUTIVE SUMMARY
Key quarter-to-date financial highlights for NW Holdings include:
Three Months Ended September 30,
2025 2024 QTD
In thousands, except per share data Amount Amount Change
Consolidated:
Operating loss $ (12,423) $ (19,332) $ 6,909
Net loss $ (29,890) $ (27,167) $ (2,723)
Diluted EPS $ (0.73) $ (0.71) $ (0.02)
THREE MONTHS ENDED SEPTEMBER 30, 2025 COMPARED TO SEPTEMBER 30, 2024.
Consolidated operating loss decreased by $6.9 million, while consolidated net loss increased by $2.7 million at NW Holdings primarily due to the following factors:
•$12.5 million increase in margin at NWN Gas Utility, primarily driven by new rates on November 1, 2024 for Oregon customers;
•$8.6 million increase in margin from the acquisition of SiEnergy; and
•$3.2 million increase in NWN Water operating revenues primarily driven by new rates at our largest utility in Arizona on November 1, 2024; partially offset by
•$12.8 million increase in operations and maintenance expenses, which included a $7.8 million increase at NWN Gas Utility driven by higher contract labor costs and payroll and benefits costs; and a $2.2 million increase from the addition of SiEnergy operations and maintenance expenses, and
•$6.0 million increase in depreciation expense due primarily to higher depreciation at NWN Gas Utility from additional capital investment.
Other factors impacting consolidated net loss:
•$11.4 million increase in interest expense due primarily to higher long-term debt balances related to debt issuances at NW Holdings reflected in Other results.
Nine Months Ended September 30,
2025 2024 YTD
In thousands, except per share data Amount Amount Change
Consolidated:
Operating income $ 169,142 $ 106,201 $ 62,941
Net income $ 55,526 $ 33,869 $ 21,657
Diluted EPS $ 1.36 $ 0.88 $ 0.48
NINE MONTHS ENDED SEPTEMBER 30, 2025 COMPARED TO SEPTEMBER 30, 2024.
Consolidated operating income increased by $62.9 million and consolidated net income increased by $21.7 million at NW Holdings primarily due to the following factors:
•$68.1 million increase in margin at NWN Gas Utility, primarily driven by new rates on November 1, 2024 for Oregon customers;
•$30.3 million increase in margin from the acquisition of SiEnergy; and
•$11.2 million increase in NWN Water operating revenues primarily driven by new rates at our largest utility in Arizona on November 1, 2024; partially offset by
•$37.0 million increase in operations and maintenance expenses, which included a $16.4 million increase at NWN Gas Utility driven byhigher payroll and benefits costs and contract labor costs; $9.7 million of transaction and business development costs;and a $5.8 million increase from the addition of SiEnergy operations and maintenance expenses, and
•$21.1 million increase in depreciation expense due primarily to $15.2 million of higher depreciation at NWN Gas Utility from additional capital investment and $6.1 million increasefrom the addition of SiEnergy.
Other factors impacting consolidated net income:
•$31.4 million increase in interest expense due primarily to higher long-term debt balances related to debt issuances at NW Holdings reflected in Other results.
RESULTS OF SEGMENTS
NWN GAS UTILITY SEGMENT RESULTS. NWN Gas Utility results were as follows:
Three Months Ended September 30, Nine Months Ended September 30, QTD Change YTD Change
In thousands, except per share data 2025 2024 2025 2024
Margin(1)
$ 81,393 $ 68,922 $ 465,437 $ 397,381 $ 12,471 $ 68,056
Operating expenses:
Operations and maintenance 61,945 54,101 190,876 174,519 7,844 16,357
General taxes 11,006 10,082 36,845 36,114 924 731
Depreciation 37,318 31,826 109,293 94,074 5,492 15,219
Total operating expenses 110,269 96,009 337,014 304,707 14,260 32,307
Income (loss) from operations (28,876) (27,087) 128,423 92,674 (1,789) 35,749
Other expense, net (45) 165 (3,594) (1,657) (210) (1,937)
Interest expense, net 14,596 14,988 45,082 46,208 (392) (1,126)
Income (loss) before income taxes (43,517) (41,910) 79,747 44,809 (1,607) 34,938
Income tax expense (benefit) (12,529) (11,506) 22,040 12,485 (1,023) 9,555
Net income (loss) $ (30,988) $ (30,404) $ 57,707 $ 32,324 $ (584) $ 25,383
EPS(2)
$ (0.75) $ (0.79) $ 1.42 $ 0.84 $ 0.04 $ 0.58
(1) See NWN Gas Utility Margin Table below for additional detail.
(2) Non-GAAP financial measure. See Non-GAAP Financial Measures-Segment Earnings Per Share for definition, reconciliation and additional information.
THREE MONTHS ENDED SEPTEMBER 30, 2025 COMPARED TO SEPTEMBER 30, 2024. The primary factors contributing to the $0.6 million increase in NWN Gas Utility net loss were as follows:
•$7.8 million increase in operations and maintenance expenses due primarily to higher contract labor costs and payroll and benefit costs; and
•$5.5 million increase in depreciation expense due to additional capital investments; partially offset by
•$12.5 million increase in margin driven by new rates on November 1, 2024 for Oregon. See the NWN Gas Utility margin table below for additional margin detail.
For the three months ended September 30, 2025, total NWN Gas Utility volumes sold and delivered decreased 6.9 million compared to the same period in 2024, primarily due to lower usage from pulp and paper industrial sales and transportation customers.
NINE MONTHS ENDED SEPTEMBER 30, 2025 COMPARED TO SEPTEMBER 30, 2024. The primary factors contributing to the $25.4 million, increase in NWN Gas Utility net income were as follows:
•$68.1 million increase in margin driven by new rates on November 1, 2024 for Oregon customers; partially offset by a decrease in the amortization of deferred balances. See the NWN Gas Utility margin table below for additional margin detail.
The increase in margin was partially offset by the following items:
•$16.4 million increase in operations and maintenance expenses due primarily to higher payroll and benefit costs and an increase in contract labor costs;
•$15.2 million increase in depreciation expense due to additional capital investments; and
•$9.6 million increase in income tax expense due to higher pre-tax income.
For the nine months ended September 30, 2025, total NWN Gas Utility volumes sold and delivered decreased $24.0 million compared to the same period in 2024 primarily due to lower usage from pulp and paper industrial sales and transportation customers and residential and commercial sales customers.
NWN GAS UTILITY MARGIN TABLE. The following table summarizes the composition of gas volumes, revenues, and cost of sales:
Three Months Ended September 30, Nine Months Ended September 30, Favorable/
(Unfavorable)
In thousands, except degree day and customer data 2025 2024 2025 2024 QTD Change YTD Change
Volumes (therms)
Residential and commercial sales 53,981 55,692 464,588 474,981 (1,711) (10,393)
Industrial sales and transportation 96,881 102,066 327,256 340,840 (5,185) (13,584)
Total volumes sold and delivered 150,862 157,758 791,844 815,821 (6,896) (23,977)
Operating Revenues
Residential and commercial sales $ 97,748 $ 90,850 $ 679,758 $ 647,326 $ 6,898 $ 32,432
Industrial sales and transportation 16,209 17,504 56,287 61,229 (1,295) (4,942)
Other distribution revenues 940 770 3,880 3,535 170 345
Other regulated services 5,169 4,880 15,506 14,640 289 866
Total operating revenues 120,066 114,004 755,431 726,730 6,062 28,701
Less: Cost of gas 32,188 38,743 248,563 287,542 6,555 38,979
Less: Environmental remediation expense 1,247 1,151 9,796 9,226 (96) (570)
Less: Revenue taxes 5,238 5,188 31,635 32,581 (50) 946
Margin $ 81,393 $ 68,922 $ 465,437 $ 397,381 $ 12,471 $ 68,056
Margin(1)
Residential and commercial sales $ 67,262 $ 55,538 $ 420,533 $ 352,679 $ 11,724 $ 67,854
Industrial sales and transportation 7,551 7,456 24,426 24,892 95 (466)
Gain (loss) from gas cost incentive sharing(2)
477 375 1,106 1,875 102 (769)
Other margin 934 676 3,866 3,302 258 564
Other regulated services 5,169 4,877 15,506 14,633 292 873
Margin $ 81,393 $ 68,922 $ 465,437 $ 397,381 $ 12,471 $ 68,056
Cost of Gas Detail
Volumes sold (therms)(3)
72,800 74,574 532,458 543,625 (1,774) (11,167)
Average cost of gas (cents per therm) $ 0.44 $ 0.52 $ 0.47 $ 0.53 $ (0.08) $ (0.06)
Degree days(4)
Average(5)
10 9 1,633 1,642 1 (9)
Actual - - 1,406 1,424 - % (1) %
Percent (warmer) colder than average weather(6)
NM NM (14) % (13) %
As of September 30,
Meters 2025 2024 Change Growth
Residential 736,002 730,236 5,766 0.8%
Commercial 68,975 69,138 (163) (0.2)%
Industrial 1,040 1,047 (7) (0.7)%
Total 806,017 800,421 5,596 0.7%
(1) Amounts reported as NWN Gas Utility margin for each category of meters are operating revenues less cost of gas, environmental remediation expense and revenue taxes, subject to earnings test considerations, as applicable.
(2)For additional information regarding NW Natural's gas cost incentive sharing mechanism, see Part II, Item 7 "Results of Operations-Regulatory Matters-Rate Mechanisms-Gas Reserves" in NW Natural's 2024 Form 10-K.
(3) This calculation excludes volumes delivered to industrial transportation customers.
(4)Heating degree days are units of measure reflecting temperature-sensitive consumption of natural gas, calculated by subtracting the average of a day's high and low temperatures from 59 degrees Fahrenheit.
(5)Average weather represents the 25-year average of heating degree days. Beginning November 1, 2024, average weather is calculated over the period June 1, 1998 through May 31, 2023, as determined in NW Natural's 2024 Oregon general rate case. From November 1, 2022 through October 31, 2024, average weather was calculated over the period June 1, 1996 through May 31, 2021, as determined in NW Natural's 2022 Oregon general rate case.
(6)NM indicates that the calculated value is not meaningful.
SIENERGY GAS UTILITY SEGMENT RESULTS. SiEnergy results and highlights include:
Three Months Ended September 30, Nine Months Ended September 30,
In thousands, except per share data 2025 2025
Margin(1)
$ 8,581 $ 30,326
Operating expenses:
Operations and maintenance 2,215 5,809
General taxes 338 821
Depreciation 1,620 6,086
Total operating expenses 4,173 12,716
Income from operations 4,408 17,610
Other income, net 170 369
Interest expense, net 2,453 7,031
Income before income taxes 2,125 10,948
Income tax expense 560 2,864
Net income $ 1,565 $ 8,084
EPS(2)
$ 0.04 $ 0.20
(1) See SiEnergy Gas Utility Margin Table below for additional detail.
(2) Non-GAAP financial measure. See Non-GAAP Financial Measures-Segment Earnings Per Share for definition, reconciliation and additional information.
SiEnergy was acquired by NW Holdings on January 7, 2025. Results for SiEnergy for the period from January 7, 2025 to September 30, 2025 are presented in the table above. SiEnergy acquired Pines on June 2, 2025, and Pines results from June 2, 2025 to September 30, 2025 are included in the table above. Prior to January 7, 2025, NW Holdings did not operate any assets that fall within its SiEnergy Gas Utility segment.
SIENERGY GAS UTILITY MARGIN TABLE. The following table summarizes the composition of gas volumes, revenues, and cost of sales:
Three Months Ended September 30, Nine Months Ended September 30,
In thousands, except degree day and customer data 2025 2025
Volumes (therms)
Residential and commercial sales 2,643 20,889
Transportation 1,124 3,360
Total volumes sold and delivered 3,767 24,249
Operating Revenues
Residential and commercial sales $ 10,947 $ 43,501
Transportation 191 585
Other distribution revenues 683 1,903
Total operating revenues 11,821 45,989
Less: Cost of gas 2,950 14,230
Less: Revenue taxes 290 1,433
Margin $ 8,581 $ 30,326
Margin(1)
Residential and commercial sales $ 7,708 $ 27,854
Transportation 190 569
Other margin 683 1,903
Margin $ 8,581 $ 30,326
Cost of Gas Detail
Volumes sold (therms)(2)
2,643 20,889
Average cost of gas (cents per therm) $ 1.12 $ 0.68
Degree days(3)
Average(4)
3 768
Actual 4 813
Percent (warmer) colder than average weather(4)
33 % 6 %
Meters As of 9/30/2025
Residential 86,306
Commercial 639
Total 86,945
(1) Amounts reported as SiEnergy margin for each category of meters are operating revenues less cost of gas and revenue taxes.
(2) This calculation excludes volumes delivered to transportation customers.
(3) Heating degree days are units of measure reflecting temperature-sensitive consumption of natural gas. SiEnergy calculates heating degree days by subtracting the average of a day's high and low temperatures from 65 degrees Fahrenheit.
(4)SiEnergy average weather represents the 10-year average of heating degree days. Beginning October 1, 2023 average weather is calculated over the period April 1, 2013 through March 31, 2023, as determined in SiEnergy's 2023 Texas general rate case.
NWN WATER UTILITY SEGMENT RESULTS.NWN Water results and highlights include:
Three Months Ended September 30, Nine Months Ended September 30, QTD Change YTD Change
In thousands, except per share data 2025 2024 2025 2024
Operating Revenues $ 18,627 $ 15,388 $ 48,830 $ 37,609 $ 3,239 $ 11,221
Operating expenses:
Operations and maintenance 9,161 7,408 24,494 20,875 1,753 3,619
General taxes 520 629 1,643 1,543 (109) 100
Revenue taxes 141 87 289 149 54 140
Depreciation 1,264 2,460 6,233 6,555 (1,196) (322)
Other operating expenses 1,006 1,008 2,297 2,439 (2) (142)
Total operating expenses 12,092 11,592 34,956 31,561 500 3,395
Income from operations 6,535 3,796 13,874 6,048 2,739 7,826
Other income, net 745 617 1,147 1,045 128 102
Interest expense, net 799 758 2,335 2,993 41 (658)
Income before income taxes 6,481 3,655 12,686 4,100 2,826 8,586
Income tax expense 1,734 1,024 3,418 1,144 710 2,274
Net income $ 4,747 $ 2,631 $ 9,268 $ 2,956 $ 2,116 $ 6,312
EPS(1)
$ 0.11 $ 0.07 $ 0.22 $ 0.08 $ 0.04 $ 0.14
Connections As of September 30, 2025 As of September 30, 2024 Change Growth
Water and wastewater 79,037 75,921 3,116 4.1 %
(1) Non-GAAP financial measure. See Non-GAAP Financial Measures-Segment Earnings Per Share for definition, reconciliation and additional information.
THREE MONTHS ENDED SEPTEMBER 30, 2025 COMPARED TO SEPTEMBER 30, 2024. The primary factors contributing to the $2.1 million, increase in net income were as follows:
•$3.2 million increase in operating revenues primarily driven by new rates at our largest utility in Arizona, additional revenues from the Infrastructure Capital Holdings acquisition, and organic customer growth; and
•$1.2 million decreasein depreciation expense driven by rate case updates to depreciation rates; partially offset by
•$1.8 million increase in operations and maintenance expenses primarily due to acquisitions.
NINE MONTHS ENDED SEPTEMBER 30, 2025 COMPARED TO SEPTEMBER 30, 2024. The primary factors contributing to the $6.3 million, increase in net income were as follows:
•$11.2 million increase in operating revenues primarily driven by new rates at our largest utility in Arizona, additional revenues from the Infrastructure Capital Holdings acquisition, and organic customer growth; partially offset by
•$3.6 million increase in operations and maintenance expenses primarily due to acquisitions; and
•$2.3 million increase in income tax expense due primarily to higher pre-tax income.
NW HOLDINGS OTHER RESULTS. Other results and highlights include:
Three Months Ended September 30, Nine Months Ended September 30, QTD Change YTD Change
In thousands, except per share data 2025 2024 2025 2024
Operating Revenues $ 14,214 $ 7,541 $ 44,956 $ 17,779 $ 6,673 $ 27,177
Operating expenses:
Cost of gas 4,290 159 14,129 47 4,131 14,082
Operations and maintenance 3,464 2,431 18,354 7,110 1,033 11,244
General taxes 202 174 604 550 28 54
Depreciation 308 266 933 783 42 150
Other operating expenses 440 552 1,701 1,810 (112) (109)
Total operating expenses 8,704 3,582 35,721 10,300 5,122 25,421
Income from operations 5,510 3,959 9,235 7,479 1,551 1,756
Other income, net 59 148 331 414 (89) (83)
Interest expense, net 12,587 3,314 35,873 9,701 9,273 26,172
Income before income taxes (7,018) 793 (26,307) (1,808) (7,811) (24,499)
Income tax expense (benefit) (1,804) 187 (6,774) (397) (1,991) (6,377)
Net income (loss) $ (5,214) $ 606 $ (19,533) $ (1,411) $ (5,820) $ (18,122)
EPS(1)
$ (0.13) $ 0.01 $ (0.48) $ (0.04) $ (0.14) $ (0.44)
(1) Non-GAAP financial measure. See Non-GAAP Financial Measures--Segment Earnings Per Share for definition, reconciliation and additional information.
THREE MONTHS ENDED SEPTEMBER 30, 2025 COMPARED TO SEPTEMBER 30, 2024. The primary factors contributing to the $5.8 million, increase in net loss were as follows:
•$9.3 million increase in interest expense due primarily to higher long-term debt at NW Holdings from bonds issued in December 2024, Junior Subordinated Debentures issued in March 2025 and higher commercial paper balances; and
•$2.5 million increase primarily from NWN Renewables operating revenues net of cost of gas.
NINE MONTHS ENDED SEPTEMBER 30, 2025 COMPARED TO SEPTEMBER 30, 2024. The primary factors contributing to the $18.1 million, increase in net loss were as follows:
•$26.2 million increase in interest expense due primarily to higher long-term debt at NW Holdings from bonds issued in December 2024, Junior Subordinated Debentures issued in March 2025 and higher commercial paper balances; and
•$11.2 million increase in operations and maintenance expenses due primarily to transaction and business development costs; partially offset by
•$13.1 million increase primarily from NWN Renewables operating revenues net of cost of gas.
CURRENT ECONOMIC AND POLITICAL CONDITIONS.Current economic and political conditions are reviewed and monitored on an ongoing basis, which include: inflation and interest rates, tariffs or trade restrictions, supply chain disruptions, impacts from the federal government shutdown, and other regulatory, physical or cyber related risks impacting our business. Further, we review U.S. federal, state and local policies, executive orders, rules, initiatives and other changes to fiscal, tax, regulation, environmental, climate and other federal policies that may impact our businesses, all of which could impact the conditions in which we operate.
We continue to evaluate the effect of additional tariffs on our businesses, specifically natural gas imports at our gas utilities. SiEnergy, located in Texas, does not import natural gas. NWN Gas Utility imported approximately 60% of our natural gas from Canada in 2024. NWN Gas Utility's third-party asset manager imports the majority of NWN Gas Utility's gas each year and is not subject to tariffs because they are a United States-Mexico-Canada Agreement (USMCA) certified importer of record. NWN Gas Utility is expected to be a USMCA certified importer in the future. We've evaluated tariffs across our businesses and at this time, we do not anticipate the currently proposed and recently implemented tariffs to have a material impact on our businesses.
Related to supply chains and lead times, these have returned to normal. For critical equipment and materials, we do extensive planning and make purchases in advance or maintain the appropriate amount of inventory to support our businesses.
For all of our businesses, we continuously monitor interest rates and financing options. Our regulated utilities generally recover interest expense on their long-term debt through their authorized cost of capital.
Regulatory Matters
For additional information, see Part II, Item 7 "Results of Operations-Regulatory Matters" in the 2024 Form 10-K.
NWN GAS UTILITY
NWN Gas Utility is subject to regulation by the OPUC and WUTC with respect to, among other matters, rates and terms of service, systems of accounts, and issuances of securities by NWN Gas Utility. At September 30, 2025, approximately 88% of NWN Gas Utility customers were located in Oregon, with the remaining 12% in Washington. Earnings and cash flows from natural gas distribution operations are largely determined by rates set in general rate cases and other proceedings in Oregon and Washington. They are also affected by weather, the local economies in Oregon and Washington, the pace of customer growth in the residential, commercial, and industrial markets, legislation and policy, customer preferences and NWN Gas Utility's ability to remain price competitive, control expenses, and obtain reasonable and timely regulatory recovery of its natural gas distribution-related costs, including operating expenses and investment costs in plant and other regulatory assets. NW Natural continuously evaluates the need for rate cases in its jurisdictions. See "Most Recent Completed Rate Cases"below.
Most Recent Completed Rate Cases
2025 OREGON RATE CASE. On October 24, 2025, the OPUC issued a final order in the Rate Case approving three prior multi-party stipulations and resolving the remaining open items in the Rate Case. New rates authorized by the OPUC were effective October 31, 2025. The final order provided for a total revenue requirement increase of $20.7 million over revenues from existing rates, which includes approximately $4.8 million related to an updated depreciation study. The revenue requirement is based on the following assumptions:
• Capital structure of 50% common equity and 50% long-term debt;
• Cost of long-term debt of 4.74%
• Return on equity of 9.5%, and
• Overall cost of capital of 7.12%
Average rate base after final adjustments for completed capital projects was $2.27 billion or an increase of $180.1 million since the last rate case.
WASHINGTON. On October 21, 2021, the WUTC issued an order concluding NW Natural's general rate case. The WUTC Order provided for an annual revenue requirement increase over two years, consisting of a 6.4% or $5.0 million increase in the first year beginning November 1, 2021 (Year One), and a 3.5% or $3.0 million increase in the second year beginning November 1, 2022 (Year Two). The increase is based on the following assumptions:
•Cost of capital of 6.814%; and
•Average rate base of $194.7 million, an increase of $20.9 million since the last rate case for capital expenditures already expended at the time of filing, with an additional expected $31.2 million increase in Year One, and an additional expected $21.4 million increase in Year Two, with the increases in Year One and Year Two relating to expected capital expenditures in those years.
The WUTC Order does not specify the underlying inputs to the cost of capital, including capital structure and return on equity. New rates authorized by the WUTC Order were effective November 1, 2021 for Year One and November 1, 2022 for Year Two. In September 2023, NW Natural received a letter of compliance from the WUTC acknowledging that the Year Two rates are no longer subject to review and refund.
Regulatory Proceeding Updates
2025 WASHINGTON RATE CASE.On August 29, 2025, NW Natural filed a request for a general rate increase with the WUTC under Washington's multi-year rate plan statute. Approximately 98,000 or 12% of NW Natural's customers are in, and approximately 10% of NW Natural's revenues are derived from Washington.
This multi-year rate plan filing includes requested increases in the annual revenue requirement over three years, consisting of a $25.6 million revenue increase in the first year beginning August 1, 2026 (Year 1), an $8.6 million revenue increase in the second year beginning August 1, 2027 (Year 2) and an $8.3 million revenue increase in the third year beginning August 1, 2028 (Year 3). The filing is based upon the following assumptions or requests:
Year 1 Year 2 Year 3
Revenue Requirement Increase $25.6 million $8.6 million $8.3 million
Capital Structure
•48.0% long-term debt
•1.0% short-term debt
•51.0% common equity
•48.0% long-term debt
•1.0% short-term debt
•51.0% common equity
•48.0% long-term debt
•1.0% short-term debt
•51.0% common equity
Return on Equity 10.1% 10.2% 10.2%
Overall Rate of Return 7.505% 7.623% 7.661%
Average Rate Base
$341.8 million(1)
$381.4 million $422.7 million
(1) Represents an increase of $94.5 million since the last rate case.
The filing reflects the effects of inflation, an updated depreciation study, and long-planned investments primarily supporting system safety and reliability, including investments at NW Natural's Mist gas storage facility, modernization of metering infrastructure and replacement of end-of-life information technology.
NW Natural's filing will be reviewed by the WUTC and other stakeholders. The process is anticipated to take up to 11 months with new rates expected to take effect August 1, 2026.
METER MODERNIZATION PROGRAM. In January 2024, NW Natural filed a request with the OPUC and WUTC to defer the incremental costs to replace or upgrade approximately 500,000 meters over four years. The deferral was approved by the WUTC in February 2024 and by the OPUC in February 2025. The amount deferred to a regulatory asset as of September 30, 2025 was approximately $3.5 million.
INTEGRATED RESOURCE PLAN (IRP). NW Natural generally files a full IRP biennially for Oregon and Washington with the OPUC and WUTC, respectively. NW Natural jointly filed its 2025 IRP for both Oregon and Washington on August 1, 2025. The 2025 IRP evaluates several scenarios based on a range of inputs and outlines the least-cost least-risk portfolio of resources required to meet future demand and environmental compliance obligations. With respect to IRPs generally, the WUTC issues letters of compliance and Oregon acknowledges the IRP Action Plan individually or in total. NW Natural anticipates that decisions from both the OPUC and WUTC will come in either the first or second quarter of 2026.
OREGON ENERGY FAIRNESS AND AFFORDABILITY ACT. In 2025, the State of Oregon enacted the Oregon Energy Fairness and Affordability Act (HB 3179). HB 3179 authorizes the OPUC to consider broader economic indicators when evaluating rate proposals and limits the frequency and timing of rate increases for electric and natural gas utilities. Specifically, NW Natural and other utilities are restricted from filing a new general rate case within 18 months of the effective date of the last general rate increase. This restriction will end on the earlier of January 2, 2027 or when the OPUC implements rules for multi-year rate plans. Utilities are not prohibited from seeking cost deferral during the 18-month period following a general rate case. HB 3179 also prevents utilities from increasing rates from November 1 through March 31 (during the winter heating season) and requires utilities to, at least annually, publish forecasts of expected rate adjustments for the following 12 months. HB 3179 additionally expands the authority of the OPUC to approve the issuance of rate recovery bonds to finance or refinance certain eligible utility capital expenditures, including a capital investment that will cause residential rates to increase by more than five percent. We expect that the new requirements may impact the timing and structure of future rate filings.
Rate Mechanisms
During 2025 and 2024, NW Natural's key approved rates and recovery mechanisms for each service area included:
Oregon Washington
2024 Rate Case (effective 11/1/2024)
2022 Rate Case (effective 11/1/2022)
2021 Rate Case
(effective 11/1/2021)
Authorized Rate Structure:
Return on Equity 9.4% 9.4% **
Rate of Return 7.1% 6.8% 6.8%
Debt/Equity Ratio 50%/50% 50%/50% **
Key Regulatory Mechanisms:
Purchased Gas Adjustment (PGA) X X X
Gas Cost Incentive Sharing X X
Decoupling X X
Weather Normalization (WARM) X X
RNG Automatic Adjustment Clause X X
Environmental Cost Recovery X X X
Interstate Storage and Asset Management Sharing X X X
** The WUTC Order does not specify the underlying inputs to the cost of capital, including capital structure and return on equity.
As of May 1, 2024, non-utility Mist gas storage deliverability of 0.2 million therms per day and 1.15 Bcf of associated storage capacity was recalled on behalf of customers to serve core utility customer needs. Customer rate impacts of this recall began on November 1, 2024.
As of May 1, 2025, additional non-utility Mist gas storage deliverability of 0.2 million therms per day and 0.28 Bcf of associated storage capacity was recalled on behalf of customers to serve core utility customer needs. Customer rate impacts of this recall will begin on November 1, 2025.
PURCHASED GAS ADJUSTMENT.Rate changes are established for NW Natural each year under purchased gas adjustment (PGA) mechanisms in Oregon and Washington to reflect changes in the expected cost of natural gas commodity purchases. The
PGA filings include costs for gas purchases, gas commodity derivative contracts, gas storage costs, gas reserves costs, pipeline demand costs, renewable natural gas and its environmental attributes, including renewable thermal certificates, and temporary rate adjustments, which amortize balances of deferred regulatory accounts.
In September 2025, NW Natural filed its annual PGAs and received approval from both OPUC and WUTC in October. The PGA rate changes became effective on October 31, 2025, in Oregon and on November 1, 2025, in Washington. Rates vary between states due to different rate structures, rate mechanisms and hedging policies.
Each year, NW Natural hedges gas prices on a portion of NW Natural's annual sales requirement based on normal weather, including both physical and financial hedges. As of September 30, 2025, NW Natural's forecasted sales volume was hedged at approximately 78% in total for the 2025-26 gas year, including 63% in financial hedges and 15% in physical gas supplies. The total hedged was approximately 83% in Oregon and 33% in Washington.
For the subsequent two gas years, NW Natural is hedged in total between 15% and 25% for annual requirements. Hedge levels are subject to change based on actual load volumes, which depend to a certain extent on weather, economic conditions, and estimated gas reserve production. Also, gas storage inventory levels may increase or decrease with storage expansion, changes in storage contracts with third parties, variations in the heat content of the gas, and or storage recall by NW Natural. We will continue to monitor gas prices as we fill storage and look at hedging plans for future gas years. Gas purchases and hedges entered into for the upcoming PGA year were included in the Company's PGA filings in Oregon and Washington.
Under the current PGA mechanism in Oregon, there is an incentive sharing provision whereby NW Natural is required to select each year an 80% deferral or a 90% deferral of higher or lower actual gas costs compared to estimated PGA prices, such that the impact on NW Natural's current earnings from the incentive sharing is either 20% or 10% of the difference between actual and estimated gas costs, respectively. For the 2025-26 and 2024-25 gas years, NW Natural selected the 90% deferral option. Under the Washington PGA mechanism, NW Natural defers 100% of the higher or lower actual gas costs, and those gas cost differences are passed on to customers through the annual PGA rate adjustment.
CLIMATE COMMITMENT ACT. Washington has enacted the Climate Commitment Act (CCA), which establishes a comprehensive program that includes an overall limit for GHG emissions from major sources in the state that declines yearly. The program began January 1, 2023. In December 2024, the WUTC re-authorized a CCA cost recovery mechanism with a rate effective date of January 1, 2025. Under this mechanism, NW Natural recovers CCA costs and will defer any difference between forecasted and actual costs in the following year. Additionally, under the approved tariff, proceeds from the sale of allowances, which is required under the CCA, would be used to offset CCA compliance costs for low-income customers. Any remaining proceeds would benefit other customers through fixed bill credits or use in other carbon reduction programs.
Additionally in December 2023, the WUTC approved a request to modify NW Natural's CCA deferral to allow for the recovery of interest from customers based on the actual cash paid for purchases of allowances, less proceeds received from the sale of allowances.
EARNINGS TEST REVIEW. NW Natural is subject to an annual earnings review in Oregon to determine if the NWN Gas Utility business is earning above its authorized ROE threshold. If NWN Gas Utility business earnings exceed a specific ROE level, then 33% of the amount above that level is required to be deferred or refunded to customers. Under this provision, if NW Natural selects the 80% deferral gas cost option, then NW Natural retains all earnings up to 150 basis points above the currently authorized ROE. If NW Natural selects the 90% deferral option, then it retains all earnings up to 100 basis points above the currently authorized ROE. For the 2025-26 and 2024-25 gas years, NW Natural selected the 90% deferral option. The ROE threshold is subject to adjustment annually based on movements in long-term interest rates. For calendar year 2024, the ROE threshold was 10.40%. NWN Gas Utility filed the 2024 earnings test in April 2025, indicating no customer credit adjustment based on results, which was approved by the OPUC in July 2025. NW Natural does not expect a customer credit adjustment for 2025 based on preliminary results of the earnings test.
GAS RESERVES. In 2011, the OPUC approved the Encana gas reserves transaction to provide long-term gas price protection for NWN Gas Utility business customers and determined costs under the agreement would be recovered on an ongoing basis through the annual PGA mechanism. Gas produced from NWN Gas Utility's interests is sold at then prevailing market prices, and revenues from such sales, net of associated operating and production costs and amortization, are included in cost of gas. The cost of gas, including a carrying cost for the rate base investment made under the original agreement, is included in NWN Gas Utility's annual Oregon PGA filing, which allows NWN Gas Utility to recover these costs through customer rates. The net investment under the original agreement earns a rate of return.
In 2014, NWN Gas Utility amended the original gas reserves agreement in response to Encana's sale of its interest in the Jonah field located in Wyoming to Jonah Energy. Under the amended agreement with Jonah Energy, NWN Gas Utility has the option to invest in additional wells on a well-by-well basis with drilling costs and resulting gas volumes shared at the amended proportionate working interest for each well in which NWN Gas Utility invests. Volumes produced from the additional wells drilled after the amended agreement are included in NWN Gas Utility's Oregon PGA at a fixed rate of $0.4725 per therm. NWN Gas Utility has not participated in additional wells since 2014.
DECOUPLING. In Oregon, NW Natural has a partial decoupling mechanism that covers residential and some commercial sales customers. Decoupling is intended to break the link between revenue and the quantity of gas consumed by customers, removing any financial incentive to discourage customers' efforts to conserve energy. This mechanism employs a use-per-customer decoupling calculation, which adjusts margin revenues to account for the difference between actual and expected customer volumes. The margin adjustment resulting from differences between actual and expected volumes under the decoupling component is recorded to a deferral account, which is included along with the annual PGA filing. The 2025 Oregon general rate case reset the Oregon decoupling baseline usage per customer.
WARM. In Oregon, NW Natural has an approved weather normalization mechanism (WARM), which is applied to residential and small commercial customer bills. This mechanism is designed to help stabilize the collection of fixed costs by adjusting residential and small commercial customer billings based on temperature variances from average weather, with rate decreases when the weather is colder than average and rate increases when the weather is warmer than average. The mechanism is applied to bills from December through mid-May of each heating season. The mechanism adjusts the margin component of customers' rates to reflect average weather, which uses the 25-year average temperature for each day of the billing period. Daily average temperatures and 25-year average temperatures are based on a set point temperature of 59 degrees Fahrenheit for residential customers and 58 degrees Fahrenheit for commercial customers. The collections of any unbilled WARM amounts due to tariff caps and floors are deferred and earn a carrying charge until collected, or returned, along with the PGA the following year. Residential and small commercial customers in Oregon are allowed to opt out of the weather normalization mechanism, and as of September 30, 2025, 7% of total eligible customers had opted out. NW Natural does not have a weather normalization mechanism approved for Washington customers, which account for about 12% of total customers.
RENEWABLE NATURAL GAS AND AUTOMATIC ADJUSTMENT CLAUSE. Oregon Senate Bill 98 (SB 98) enables natural gas utilities to procure or develop RNG, including hydrogen, on behalf of their Oregon customers. The legislation and rules set voluntary goals for adding as much as 30% RNG into the state's pipeline system by 2050; enables gas utilities to invest in and own the cleaning and conditioning equipment required to bring raw biogas and landfill gas up to pipeline quality, as well as the facilities to connect to the local gas distribution system; and allowing up to 5% of a utility's revenue requirement to be used to cover the incremental cost or investment in RNG infrastructure.
Investments in RNG facilities are recovered through an automatic adjustment clause that allows recovery of NW Natural's investments in RNG projects, including operating costs, to be added to rates annually on November 1st, following a prudence review. The RNG recovery mechanism allows NW Natural to defer for recovery or credit the differences between the forecasted and actual costs of the RNG projects, subject to an earnings test that includes deadbands at 50 basis points below and above NW Natural's authorized ROE. For RNG procurement contracts, NW Natural seeks recovery of the costs along with the PGA, subject to a prudence review.
NW Natural has two investments in RNG facilities the OPUC has approved for recovery in rates. NW Natural filed the 2024 earnings test in April 2025, indicating no adjustment based on results. The OPUC approved the 2024 earnings test in July 2025.
ENVIRONMENTAL COST DEFERRAL AND RECOVERY. NW Natural has authorizations in Oregon and Washington to defer costs related to remediation of properties that are owned or were previously owned by NW Natural. In Oregon, a Site Remediation and Recovery Mechanism (SRRM) is currently in place to recover prudently incurred costs allocable to Oregon customers, subject to an earnings test. Effective beginning November 1, 2019, the WUTC authorized an Environmental Cost Recovery Mechanism (ECRM) for recovery of prudently incurred costs allocable to Washington customers.
Oregon SRRM
Under the Oregon SRRM collection process there are three types of deferred environmental remediation expense:
•Pre-review - This class of costs represents remediation spend that has not yet been deemed prudent by the OPUC. Carrying costs on these remediation expenses are recorded at NW Natural's authorized cost of capital. NW Natural anticipates the prudence review for annual costs and approval of the earnings test prescribed by the OPUC to occur by the third quarter of the following year.
•Post-review - This class of costs represents remediation spend that has been deemed prudent and allowed after applying the earnings test, but is not yet included in amortization. NW Natural earns a carrying cost on these amounts at a rate equal to the five-year treasury rate plus 100 basis points.
•Amortization - This class of costs represents amounts included in current customer rates for collection and is calculated as one-fifth of the post-review deferred balance. NW Natural earns a carrying cost equal to the amortization rate determined annually by the OPUC, which approximates a short-term borrowing rate. NW Natural included $8.8 million and $9.6 million of deferred remediation expense approved by the OPUC for collection during the 2024-25 and 2023-24 PGA years, respectively.
In addition, the SRRM also provides for the annual collection of $5.0 million from Oregon customers through a tariff rider. As it collects amounts from customers, NW Natural recognizes these collections as revenue net of any earnings test adjustments and separately amortizes an equal and offsetting amount of the deferred regulatory asset balance through the environmental remediation operating expense line shown separately in the operating expenses section of the Consolidated Statements of Comprehensive Income (Loss). For additional information, see Note 17 in the 2024 Form 10-K.
The SRRM earnings test is an annual review of adjusted NWN Gas Utility ROE compared to authorized NWN Gas Utility ROE. To apply the earnings test NW Natural must first determine what if any costs are subject to the test through the following calculation:
Annual spend
Less: $5.0 million base rate rider
Prior year carry-over(1)
$5.0 million insurance + interest on insurance
Total deferred annual spend subject to earnings test
Less: over-earnings adjustment, if any
Add: deferred interest on annual spend(2)
Total amount transferred to post-review
(1)Prior year carry-over results when the prior year amount transferred to post-review is negative. The negative amount is carried over to offset annual spend in the following year.
(2)Deferred interest is added to annual spend to the extent the spend is recoverable.
To the extent the NWN Gas Utility business earns at or below its authorized ROE as defined in the SRRM, the total amount transferred to post-review is recoverable through the SRRM. To the extent more than authorized ROE is earned in a year, the amount transferred to post-review would be reduced by those earnings that exceed its authorized ROE. NW Natural concluded there was no earnings test adjustment for 2024 based on the environmental earnings test that was filed in April 2025 and approved by the OPUC in July 2025.
Washington ECRM
The ECRM established by the WUTC order effective November 1, 2019 permits NW Natural's recovery of environmental remediation expenses allocable to Washington customers. These expenses represent 3.32% of costs associated with remediation of sites that historically served both Oregon and Washington customers. The order allows for recovery of past deferred and future prudently incurred remediation costs allocable to Washington through application of insurance proceeds and collections from customers. Prudently incurred costs that were deferred from the initial deferral authorization in February 2011 through June 2019 were fully offset with insurance proceeds, with any remaining insurance proceeds to be amortized over a 10.5 year period. On an annual basis NW Natural will file for a prudence determination and a request to recover remediation expenditures in excess of insurance amortizations in the following year's customer rates. After insurance proceeds are fully amortized, if in a particular year the request to collect deferred amounts exceeds one percent of Washington normalized revenues, then the excess will be collected over three years with interest.
INTERSTATE STORAGE AND ASSET MANAGEMENT SHARING. On an annual basis, NW Natural credits amounts to Oregon and Washington customers as part of a regulatory incentive sharing mechanism related to net revenues earned from Mist gas storage for assets developed in advance of utility customer needs, and asset management revenues. In January 2025, the OPUC approved the annual 2025 bill credit for Oregon customers' share of interstate storage and asset management activities totaling approximately $15.5 million, which was credited to customers' bills in February 2025. This includes revenue generated for the November 2023 through October 2024 PGA year. Credits are given to customers in Washington as reductions in rates through the annual PGA filing in November.
SIENERGY GAS UTILITY
Most Recently Completed Rate Case
SiEnergy Gas Utility's natural gas distribution business is located in Texas and primarily serves customers in the Houston, Dallas, and Austin metropolitan areas. Under Texas' regulatory paradigm, original jurisdiction over natural distribution rates is shared between the Railroad Commission of Texas (RRC) and the municipalities where the utility provides service. The RRC has exclusive original jurisdiction over natural gas utility rates in areas outside of municipalities. A municipality has original jurisdiction over the rates, operations and services provided by any gas utility distributing natural gas within city or town limits, unless it has surrendered its original jurisdiction to the RRC. However, any municipal rate decision can be appealed to the RRC, which will conduct its own review, including compiling a new evidentiary record. SiEnergy's last general rate case was settled in 2023 with new rates effective in September 2023. As part of the black box settlement, SiEnergy's annual revenue requirement increased by $5.5 million based on an approved net plant amount of approximately $151.6 million through March 31, 2023. Given the nature of the black box settlement, SiEnergy's authorized rate of return and capital structure were not specified.
SiEnergy does not currently have any open or ongoing general rate cases and is continuously evaluating the need for future general rate cases.
Regulatory Proceeding Updates
TEXAS HOUSE BILL 4384. In June 2025, Texas House Bill 4384 was signed into law, allowing gas utilities in Texas to defer, and later recover, specific costs related to property, plant and equipment placed in service, but not yet reflected in base rates, including depreciation, ad valorem taxes, and carrying cost. The RRC is required to adopt rules to implement the new law within
270 days of the effective date. SiEnergy applied the new provisions to property, plant and equipment placed in service but not yet reflected in rates in the third quarter of 2025. The impact was not material for third quarter results.
CUSTOMER RATE RELIEF BONDS. In February 2022, the RRC issued a Financing Order to the Texas Public Financing Authority (TPFA) authorizing the issuance of the customer rate relief bonds to securitize the aggregated extraordinary costs associated with Winter Storm Uri for all participating natural gas utilities. In March 2023, the bonds were issued by the TPFA and $18.8 million of proceeds were received by SiEnergy. The majority of the proceeds were used to pay down the related long-term debt. SiEnergy began billing and collecting customer rate relief charges from customers in October 2023. Customer rate relief charges collected by SiEnergy are owned by the TPFA and are remitted to the TPFA on a monthly basis.
NWN WATER UTILITY
NWN Water Utility currently serves approximately 197,000 people through over 79,000 connections across six states. The wholly-owned regulated water businesses of NWN Water are subject to regulation by the utility commissions in the states in which they are located, which currently includes Oregon, Washington, Arizona, Idaho, and Texas. The wholly-owned regulated wastewater businesses of NWN Water are subject to regulation by the utility commissions in the states in which they are located, which currently includes Texas and Arizona. In addition, NWN Water includes wholly-owned unregulated wastewater businesses in Oregon, Washington, and Idaho.
Most Recently Completed Rate Cases
•Foothills water and sewer utilities completed a general rate case in Arizona with the Arizona Corporation Commission (ACC) with new rates effective November 1, 2024. The rate case resulted in a $0.9 million revenue requirement increase for water customers and a $3.0 million revenue requirement increase for sewer customers based on a regulated capital structure of 55% equity and 45% debt and a 9.55% ROE.
•Sunriver Water completed a general rate case in Oregon with the OPUC with new rates effective November 1, 2024. The rate case resulted in a $0.4 million revenue requirement increase for water customers based on a capital structure of 50% Equity and 50% Debt and a 9.5% ROE.
•Avion Water, a regulated water company in Oregon, for which NWN Water owns approximately 47.9%, completed a general rate case with the OPUC with new rates effective February 1, 2025. The rate case resulted in a $1.3 million revenue requirement increase based on a capital structure of 51.35% Equity and 48.65% Debt and a 9.5% ROE.
•Suncadia Water, a regulated water company in Washington, completed a general rate case with the WUTC with new rates effective July 1, 2025. The rate case resulted in a $0.3 million revenue requirement increase based on a settlement with all parties.
•Gem State Water, a regulated water company in Idaho, completed a general rate case with the IPUC with new rates effective August 1, 2025. The rate case resulted in a $0.4 million revenue requirement increase based on a capital structure of 55% Equity and 45% Debt and a 9.8% ROE.
•Falls Water, a regulated water company in Idaho, completed a general rate case with the IPUC with new rates effective September 1, 2025. The rate case resulted in a $0.6 million revenue requirement increase based on a capital structure of 55% Equity and 45% Debt and a 9.8% ROE.
•Cascadia Water, a regulated water company in Washington State, completed a general rate case with the WUTC with new rates effective October 21, 2025. The rate case resulted in a $1.1 million revenue requirement increase for water customers.
•South Coast Water, a regulated water company in Oregon, completed a general rate case with the OPUC with new rates effective August, 15, 2025. The rate case resulted in a $0.023 million revenue requirement increase and a 9.5% ROE.
•Seavey Loop Water, a regulated water company in Oregon, completed a general rate case with the OPUC with new rates effective October, 1st, 2025. The rate case resulted in a $0.043 million revenue requirement increase and a 9.5% ROE.
Regulatory Proceeding Updates
•Foothills Utilities implemented, effective June 24, 2025, a surcharge associated with its new wastewater reclamation facility that is designed to recover an additional $0.75 million of revenue requirement annually.
•Blue Topaz water utility in Texas received approval of the acquisition of a water utility with approximately 700 connections in Texas. After completing a fair market valuation process through the Public Utility Commission of Texas (PUCT), NWN Water filed the application with the PUCT in the first quarter of 2024. The acquisition closed in the first quarter of 2025.
•Blue Topaz water utility in Texas is seeking approval of the acquisition of a water utility with approximately 1,500 connections in Texas. After completing a fair market valuation process through the PUCT, Blue Topaz filed the application in the second quarter of 2025. The application has been approved and the acquisition is expected to close in the fourth quarter of 2025.
OTHER
NW Natural's interstate storage activities at its Mist Storage facility are subject to regulation by the OPUC, WUTC, and the Federal Energy Regulatory Commission (FERC) with respect to, among other matters, rates and terms of service. The OPUC also regulates intrastate storage services at Mist, while FERC regulates interstate storage services at Mist. The FERC uses a maximum cost of service model which allows for gas storage prices to be set at or below the cost of service as approved by each
agency in their last regulatory filing. The OPUC Schedule 80 rates are tied to the FERC rates, and are updated whenever NW Natural modifies FERC maximum rates. NW Natural is required under its Mist interstate storage certificate authority and rate approval orders to file every five years either a petition for rate approval or a cost and revenue study to change or justify maintaining the existing rates for its interstate storage services. NW Natural filed a rate petition with the FERC in August 2023 and the revised rates were effective beginning September 1, 2023.
Other Legislative Matters
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. OBBBA includes a range of tax reform provisions. We completed our evaluation of the legislation and do not expect it to have a material impact on our results of operations, liquidity or capital resources.
Environmental Regulation and Legislation Matters
Certain of our businesses, including our natural gas businesses, are subject to or likely to be affected by current or future legislation, regulation, directed government funding, penalties for non-compliance, litigation and other forms of policies or actions seeking to regulate GHG emissions, including, but not limited to: GHG emissions limits, reporting requirements, carbon taxes, requirements to purchase carbon credits, building codes, efficiency standards, charges to fund energy efficiency activities or other regulatory actions, incentives or mandates to conserve energy or use renewable energy sources, tax advantages or other subsidies to support alternative energy sources, a reduction in rate recovery for construction costs related to the installation of new customer services or other new infrastructure investments, mandates for the use of specific fuels or technologies, bans on specific fuels or technologies, or promotion of research into new technologies to reduce the cost and increase the scalability of alternative energy sources.
Federal
A number of federal agencies currently regulate GHG emissions. For example, the EPA regulates GHG emissions pursuant to the Clean Air Act and requires the annual reporting of GHG emissions from certain industries, specified emission sources, and facilities. Under this reporting rule, our natural gas distribution businesses are required to report system throughput to the EPA on an annual basis. The EPA also has required additional GHG reporting regulations to which NW Natural is subject, requiring the annual reporting of fugitive emissions from operations.
During his administration, former President Biden advanced a range of climate-related initiatives through executive orders and agency actions. Federal legislation passed under the Biden administration, such as the Inflation Reduction Act of 2022 (IRA), included several climate and energy provisions. Upon taking office in January 2025, President Trump issued executive orders directing the U.S. Ambassador to the United Nations to withdraw from the Paris Agreement on Climate and declaring a "national energy emergency" in the United States. Additional executive orders have sought to promote energy independence and revoke Biden administration executive orders related to climate policy. In addition, the recently enacted One Big Beautiful Bill Act (OBBBA) includes provisions that phase out tax credits for certain renewable fuels projects. We expect continued changes to climate policy under the Trump Administration, including additional executive orders, regulations, programs and other federal actions. We are currently evaluating these developments but cannot predict the timing, form, or potential impact of future federal actions on our business.
Washington State
In 2024, Washington comprised approximately 10% of NW Natural's revenues, as well as 2% and 13% of new meters from commercial and residential customers, respectively.
Effective February 2021, Washington state building codes (WSEC-2018) require new residential homes to meet energy efficiency standards based on carbon emissions assumptions that consider electric appliances to have lower on-site GHG emissions than comparable gas appliances. This increases the cost of constructing new homes with natural gas depending on a number of factors including home size, equipment configurations, and building envelope measures. In March 2024, rules enacted by the Washington State Building Code Council (SBCC) (WSEC-2021) took effect that modified the 2021 codes, and collectively, these rules generally have the effect of restricting or eliminating the use of gas space and water heating in new commercial and residential construction. The SBCC rules are currently subject to pending legal challenges.
In November 2024, Washington Ballot initiative I-2066 was passed. I-2066 was described on the ballot as prohibiting state and local governments from restricting access to natural gas, prohibiting the SBCC from discouraging or penalizing the use of natural gas in any building, requiring providers of natural gas to provide energy services regardless of the other energy sources available, and prohibiting the Washington Utilities and Transportation Commission (WUTC) from approving any multiyear rate plan requiring or incentivizing a natural gas company to terminate natural gas service or make such natural gas service cost-prohibitive. Although the SBCC has indicated that the current SBCC codes will remain in place while the SBCC investigates any changes necessary under I-2066, the King County Washington Superior Court recently issued a ruling declaring I-2066 invalid under the Washington state constitution. The plaintiffs have appealed such litigation, which is pending in the Washington Supreme Court. We cannot currently predict the ultimate outcome of such appeal, or if there will be any further changes to the SBCC codes.
In 2022, the state of Washington enacted the Climate Commitment Act (CCA), which establishes a comprehensive program that includes an overall limit for GHG emissions from major sources in the state that declines yearly beginning January 1, 2023,
resulting in an overall reduction of GHG emissions to 95% below 1990 levels by 2050. The Washington Department of Ecology has adopted rules to create a cap-and-invest program, under which entities, including natural gas and electric utilities, large manufacturing facilities, and transportation and other fuel providers, which are subject to the CCA must either reduce their emissions, purchase qualifying offsets (including RNG) or obtain allowances to cover any remaining emissions. NW Natural is subject to the CCA, has received an order authorizing deferral of CCA costs from the WUTC, and is currently recovering CCA compliance costs in rates.
Oregon
In November 2024, the Environmental Quality Commission of the Oregon Department of Environmental Quality (ODEQ) issued final cap and reduce rules for its Climate Protection Program (CPP), which became effective on January 1, 2025. The CPP establishes a program to reduce GHG emissions from covered entities, including natural gas utilities, by 50% by 2035 and 90% by 2050 from a 2017-2019 baseline. The first compliance period for the CPP concludes December 31, 2027. ODEQ previously promulgated CPP rules in December 2021, but the Oregon Court of Appeals invalidated these previous CPP rules in December 2023 for the agency's failure to comply with rulemaking requirements under state law. NW Natural received an order from the OPUC authorizing deferral of costs under the prior CPP and current CPP. NW Natural will pursue recovery of costs associated with compliance with the current CPP in rates. NW Natural is recovering in rates costs associated with RNG acquired pursuant to Senate Bill 98, which also supports compliance under CPP.
On October 25, 2024, the OPUC issued its final order related to our 2024 Oregon General Rate Case, approving the parties' Stipulations and resolving remaining open items. The OPUC also ordered the phase out of NW Natural's line extension allowance and ordered a downward adjustment to rate base of undepreciated line extension costs. NW Natural filed an appeal with the Oregon Court of Appeals on December 23, 2024, challenging the determination and the authority of the OPUC to take these actions and this litigation remains pending.
Local Jurisdictions and Other Advocacy
Advocacy groups have indicated a willingness to pursue municipal ordinances and ballot measures or other local activities disincentivizing gas infrastructure. A number of cities or counties across the country have taken action, and several in our service territory are considering actions such as limitations or bans on the use of natural gas in new construction or otherwise. For example, the Eugene City Council continues to develop a plan to address GHG emissions, align incentives around GHG emissions and to engage in a number of actions, including identifying potential revenue sources, like a gas supplier tax. Similarly, some jurisdictions and advocates are seeking to ban the use of natural gas and certain natural gas appliances inside homes contending that there are detrimental indoor health effects associated with the use of natural gas.
NW Natural is actively engaged with federal, state and local policymakers, consumers, customers, small businesses and other business coalitions, economic development practitioners, and other advocates in our service territory and is working with these communities to communicate the role that direct use natural gas, and in the coming years, RNG and hydrogen, can play in pursuing more effective policies to reduce GHGs while supporting reliability, resiliency, energy choice, equity, and energy affordability.
NW Natural Climate Initiatives and Compliance Actions
Our residential customers are currently paying approximately the same amount for their natural gas as they did 20 years ago. We expect that compliance with any form of regulation of GHG emissions will require additional resources and legislative or regulatory tools and will increase costs. The evolving guidance to implement the CCA and CPP, evolving carbon credit markets, decades-long compliance timeframes, likely changes in law and policy, and technological advancements, all make it difficult to accurately predict long-term tools for and costs of compliance. We are currently including costs of compliance with the CCA in rates. CCA compliance costs represent a 4.6% increase on residential bills starting on January 1, 2025, which is 7.5% lower than the compliance costs on average residential bills in the prior year. Low income customers do not participate in these compliance costs and are not impacted. NW Natural is currently recovering in Oregon rates certain investments in RNG and RNG offtakes, as well as costs related to NW Natural's transportation energy efficiency program, all of which support NW Natural's compliance under CPP.
We are not currently able to quantify the extent to which limitations on natural gas use, or declining line extension allowances provided in rates to cover construction costs for new services, will affect new meter additions, or to what extent carbon compliance costs included in rates will affect the competitiveness of our business and the demand for natural gas service. All of these developments could negatively affect our gas utility customer growth. However, at the same time, other sources of energy are or will be subject to, GHG-related compliance requirements that are likely to affect their cost and competitiveness relative to natural gas. For example, Oregon's HB 2021 and Washington's SB 5116 require certain GHG emissions reductions from electric utilities. We expect compliance with these and other laws will increase the cost of energy for electric customers in our service territory. We are not able to determine at this time whether increased electricity costs will make natural gas use more or less competitive on a relative basis.
We further expect these and other trends to drive innovation of, and demand for, technological developments and innovative new products that reduce GHG emissions. Research and development are occurring across the energy sector, including in the gas sector with work being conducted on gas heat pumps, higher efficiency water and space heating appliances including hybrid systems, carbon capture utilization and storage developments, continued development of technologies related to RNG, and various forms of hydrogen for different applications, among others.
FINANCIAL CONDITION
Cash Flows
The following discussion of changes in cash flows refers to the consolidated results of NW Holdings, the substantial majority of which consist of the operating results of NW Natural. When significant activity exists at NW Holdings that does not exist at NW Natural, additional disclosure has been provided.
Operating Activities
Changes in operating cash flows are primarily affected by net income or loss, changes in working capital requirements, and other cash and non-cash adjustments to operating results.
Nine Months Ended September 30,
In thousands 2025 2024 YTD Change
NW Holdings cash provided by operating activities $ 265,852 $ 219,697 $ 46,155
NW Natural cash provided by operating activities 276,419 232,634 43,785
NINE MONTHS ENDED SEPTEMBER 30,2025 COMPARED TO SEPTEMBER 30, 2024. Cash provided by operating activities increased $46.2 million at NW Holdings and $43.8 million at NW Natural. The significant factors contributing to the increase at NW Natural wereas follows:
•$28.1 million increase in net income;
•$19.7 million increase in income and other taxes payable;
•$15.4 million increase in depreciation;
•$13.6 million decrease in asset optimization revenue sharing bill credits;
•$12.3 million decrease in cloud-based software;
•$10.5 million increase in deferred income taxes;
•$9.4 million decrease in contributions to qualified defined benefit pension plans; and
•$8.8 million increase in asset optimization revenue sharing; partially offset by
•$45.5 million increase in gas costs;
•$23.1 million decrease in the decoupling mechanism primarily due to lower residential customer usage; and
•$11.5 million decrease in regulatory accounts.
The increase in cash provided by operating activities at NW Holdings was primarily driven by the NW Natural factors discussed above.
NW Holdings and NW Natural have lease and purchase commitments relating to their operating activities that are financed with cash flows from operations. For information on cash flow requirements related to leases and other purchase commitments, see Note 7 and Note 16 in the 2024 Form 10-K.
Investing Activities
Nine Months Ended September 30,
In thousands 2025 2024 YTD Change
NW Holdings cash used in investing activities $ (667,480) $ (326,295) $ (341,185)
NW Natural cash used in investing activities (264,987) (267,081) 2,094
NINE MONTHS ENDED SEPTEMBER 30, 2025 COMPARED TO SEPTEMBER 30, 2024. Cash used in investing activities increased $341.2 million at NW Holdings and decreased $2.1 million at NW Natural. The increase in cash used in investing activities at NW Holdings was primarily driven by the acquisition of SiEnergy on January 7, 2025, for which $271.1 million in cash consideration was paid, and the acquisition of Pines on June 2, 2025, for which $60.8 million in cash consideration was paid. In addition, NW Holdings capital expenditures were higher by $38.4 million, driven by continued investment in our natural gas, water and wastewater utility systems.
NW Holdings capital expenditures for 2025 are expected to be in the range of $450 million to $500 million and for the six-year period from 2025 to 2030 are expected to range from $2.5 billion to $2.7 billion. NWN Gas Utility capital expenditures for 2025 are expected to be in the range of $350 million to $380 million and for the six-year period from 2025 to 2030 are expected to be approximately 70% of NW Holdings expected capital expenditure range. SiEnergy capital expenditures for 2025 are expected to be in the range of $65 million to $75 million. NWN Water capital expenditures for 2025 are expected to be in the range of $35 million to $45 million.
The timing and amount of the core capital expenditures and projects for 2025 and the next six years could change based on regulation, growth, and cost estimates. Additional investments in our infrastructure during and after 2025 that are not incorporated in the estimates provided above will depend largely on additional regulations, growth, and expansion opportunities. Required funds for the investments are expected to be internally generated or financed with long-term debt or equity, as appropriate.
North Mist Gas Storage Facility
The North Mist gas storage facility began operations in 2019. The North Mist facility provides long-term, no-notice underground gas storage service and is dedicated solely to Portland General Electric (PGE) under a 30-year contract with options to extend up to an additional 50 years upon mutual agreement of the parties. PGE uses the facility to fuel its gas-fired electric power generation facilities.
North Mist includes a reservoir providing 4.1 Bcf of available storage, a compressor station with a contractual capacity of 120,000 dekatherms of gas deliverability per day, no-notice service that can be drawn on rapidly, and a 13-mile pipeline to connect to PGE's Port Westward gas plants in Clatskanie, Oregon.
The facility is included in rate base under an established tariff schedule with revenues recognized consistent with the schedule. Billing rates are updated annually to the forecasted depreciable asset level and forecasted operating expenses.
Mist has a number of depleted reservoirs that have not been developed into storage at this time such that NW Natural has additional expansion opportunities in the Mist storage field. To explore our opportunities, we applied for an Energy Facility Siting Council (EFSC) permit and received approval in January 2025. The permit gives us flexibility for potential upgrades and expansions. Any project we proceed with will take multiple years to permit, develop and put into service and is not currently part of our planned capital expenditures outlined in "Financial Conditions - Investing Activities". Any expansion would be based on market demand, cost effectiveness, available financing, receipt of future permits, and other rights.
Financing Activities
Nine Months Ended September 30,
In thousands 2025 2024 YTD Change
NW Holdings cash provided by financing activities $ 389,476 $ 103,782 $ 285,694
NW Natural cash provided (used) by financing activities (16,994) 27,930 (44,924)
NINE MONTHS ENDED SEPTEMBER 30,2025 COMPARED TO SEPTEMBER 30, 2024. Cash provided by financing activities increased $285.7 million at NW Holdings and cash used by financing activities increased $44.9 million at NW Natural.
The increase in cash provided by financing activities at NW Holdings was primarily driven by higher issuances of long-term debt, partially offset by lower borrowing on short-term debt, lower proceeds from common stock issuances, and higher repayments on long-term debt.
The increase in cash used by financing activities at NW Natural was primarily attributable to an increase in short-term debt repayments and increased repayments of long-term debt, net of cash contributions received from parent.
Capital Structure
NW Holdings' long-term goal is to maintain a strong and balanced consolidated capital structure. NW Natural targets a regulatory capital structure of 50% common equity and 50% long-term debt, which is consistent with approved regulatory allocations in Oregon, which has an allocation of 50% common equity and 50% long-term debt without recognition of short-term debt.
When additional capital is required, debt or equity securities are issued depending on both the target capital structure and market conditions. These sources of capital are also used to fund long-term debt retirements and short-term commercial paper maturities. See "Liquidity and Capital Resources" below and Note 9. Achieving our target capital structure and maintaining sufficient liquidity to meet operating requirements is necessary to maintain attractive credit ratings and provide access to the capital markets at reasonable costs.
NW Holdings' consolidated capital structure, excluding short-term debt, was as follows:
September 30, December 31,
2025 2024 2024
Common equity 39.0 % 46.3 % 44.8 %
Long-term debt (including current maturities) 61.0 53.7 55.2
Total 100.0 % 100.0 % 100.0 %
NW Natural's consolidated capital structure, excluding short-term debt, was as follows:
September 30, December 31,
2025 2024 2024
Common equity 52.2 % 47.2 % 49.2 %
Long-term debt (including current maturities) 47.8 52.8 50.8
Total 100.0 % 100.0 % 100.0 %
As of September 30, 2025 and 2024, and December 31, 2024, NW Holdings' consolidated capital structure included common equity of 37.0%, 43.9% and 42.4%; long-term debt of 55.0%, 50.3% and 51.4%; and short-term debt including current maturities of long-term debt of 8.0%, 5.8% and 6.2%, respectively. As of September 30, 2025 and 2024, and December 31, 2024, NW Natural's consolidated capital structure included common equity of 51.1%, 45.4%, and 46.9%; long-term debt of 46.3%, 50.1% and 47.2%; and short-term debt including current maturities of long-term debt of 2.6%, 4.5%, and 5.9%, respectively.
Liquidity and Capital Resources
At September 30, 2025 and 2024, NW Holdings had approximately $32.2 million and $35.0 million, and NW Natural had approximately $20.3 million and $18.3 million of cash and cash equivalents, respectively. In order to maintain sufficient liquidity during periods when capital markets are volatile, NW Holdings and NW Natural may elect to maintain higher cash balances and add short-term borrowing capacity. NW Holdings and NW Natural may also pre-fund their respective capital expenditures when long-term fixed rate environments are attractive. NW Holdings and NW Natural expect to have ample liquidity in the form of cash on hand and from operations and available credit capacity under credit facilities to support funding needs.
ATM Equity Program
In August 2021, NW Holdings initiated an at-the-market (ATM) equity program by entering into an equity distribution agreement under which NW Holdings issued and sold from time to time shares of common stock, no par value, having an aggregate gross sales price of up to $200 million. In August 2024, the Finance Committee of the NW Holdings' Board of Directors authorized NW Holdings' sale of an additional $200 million in the aggregate gross sales price under the ATM equity program, with the result that a total of $400 million in the aggregate gross sales price has been authorized for issuance and sale under the ATM equity program. NW Holdings is under no obligation to offer and sell common stock under the ATM equity program. Any shares of common stock offered under the ATM equity program are registered on NW Holdings' universal shelf registration statement filed with the SEC, which expires August 2027, or will be registered on a subsequent registration statement to be filed by NW Holdings.
During the three months ended September 30, 2025, NW Holdings issued and sold 574,885 shares of common stock pursuant to the ATM equity program resulting in cash proceeds of $23.2 million, net of fees and commissions paid to agents of $0.3 million. During the nine months ended September 30, 2025, NW Holdings issued and sold 1,178,509 shares of common stock pursuant to the ATM equity program resulting in cash proceeds of $47.5 million, net of fees and commissions paid to agents of $0.7 million. As of September 30, 2025, $103.4 million of equity remained available for issuance under the ATM equity program.
NW Holdings
For NW Holdings, short-term liquidity is primarily provided by cash balances, dividends from its operating subsidiaries, proceeds from the sale of commercial paper notes, as well as a multi-year credit facility, and short-term credit facilities. NW Holdings also has a universal shelf registration statement filed with the SEC for the issuance of debt and equity securities. NW Holdings long-term debt and equity issuances are primarily used to provide equity contributions to NW Holdings' operating subsidiaries for operating and capital expenditures and other corporate purposes. NW Natural also has a universal shelf registration statement filed with the SEC for the issuance of debt securities. NW Holdings' issuance of securities is not subject to regulation by state public utility commissions, but the dividends from NW Natural to NW Holdings are subject to regulatory ring-fencing provisions. NW Holdings guarantees the debt of its wholly-owned subsidiary, NWN Water. See "Long-Term Debt" below for more information regarding NWN Water debt.
As part of the ring-fencing conditions agreed upon with the OPUC and WUTC in connection with the holding company reorganization, NW Natural may not pay dividends or make distributions to NW Holdings if NW Natural's credit ratings and common equity ratio, defined as the ratio of equity to long-term debt, fall below specified levels. If NW Natural's long-term secured credit ratings are below A- for S&P and A3 for Moody's, dividends may be issued so long as NW Natural's common equity ratio is 45% or more. If NW Natural's long-term secured credit ratings are below BBB for S&P and Baa2 for Moody's, dividends may be issued so long as NW Natural's common equity ratio is 46% or more. Dividends may not be issued if NW Natural's long-term secured credit ratings are BB+ or below for S&P or Ba1 or below for Moody's, or if NW Natural's common equity ratio is below 44%, where the ratio is measured using common equity and long-term debt excluding imputed debt or debt-like lease obligations. In each case, common equity ratios are determined based on a preceding or projected 13-month average. In addition, there are certain OPUC notice requirements for dividends in excess of 5% of NW Natural's retained earnings, or more than 10% of its retained earnings over a six-month period, and for special cash dividends paid in addition to regularly quarterly dividends.
Additionally, if NW Natural's common equity (excluding goodwill and equity associated with non-regulated assets), on a preceding or projected 13-month average basis, is less than 46% of NW Natural's capital structure, NW Natural is required to notify the OPUC, and if the common equity ratio falls below 44%, file a plan with the OPUC to restore its equity ratio to 44%. This condition is designed to ensure NW Natural continues to be adequately capitalized under the holding company structure. Under the WUTC order, the average common equity ratio must not exceed 56%.
At September 30, 2025, NW Natural satisfied the ring-fencing provisions described above.
Based on several factors, including current cash reserves, committed credit facilities, its ability to receive dividends from its operating subsidiaries, in particular NW Natural, and an expected ability to issue long-term debt and equity securities in the capital markets, NW Holdings believes its liquidity is sufficient to meet anticipated cash requirements, including all contractual obligations, investing, and financing activities as discussed in "Cash Flows" above, for at least the next 12 calendar months beginning April 1, 2025 and beyond such 12-month period based on NW Holdings' current business plans.
NW HOLDINGS DIVIDENDS. Quarterly dividends have been paid on common stock each year since NW Holdings' predecessor's stock was first issued to the public in 1951. Annual common stock dividend payments per share, adjusted for stock splits, have increased each year since 1956. The declarations and amount of future dividends to shareholders will depend upon earnings, cash flows, financial condition, NW Natural's ability to pay dividends to NW Holdings and other factors. The amount and timing of dividends payable on common stock is at the sole discretion of the NW Holdings Board of Directors.
Dividend highlights include:
Three Months Ended September 30, Nine Months Ended September 30, QTD Change YTD Change
Per common share 2025 2024 2025 2024
Dividends paid $ 0.4900 $ 0.4875 $ 1.4700 $ 1.4625 $ 0.0025 $ 0.0075
In October 2025, the Board of Directors of NW Holdings declared a quarterly dividend on NW Holdings common stock of $0.4925 per share. The dividend is payable on November 14, 2025 to shareholders of record on October 31, 2025, reflecting an annual indicated dividend rate of $1.97 per share.
NW Natural
For the NWN Gas Utility business segment, short-term borrowing requirements typically peak during colder winter months when NWN Gas Utility borrows money to cover the lag between natural gas purchases and bill collections from customers. Short-term liquidity for the NWN Gas Utility business is primarily provided by cash balances, internal cash flow from operations, proceeds from the sale of commercial paper notes, as well as available cash from multi-year credit facilities, short-term credit facilities, company-owned life insurance policies, the sale of long-term debt, and equity contributions from NW Holdings. NW Natural's long-term debt and contributions from NW Holdings are primarily used to finance NWN Gas Utility capital expenditures, refinance maturing debt, and provide temporary funding for other general corporate purposes of the NWN Gas Utility business.
Based on its current debt ratings (see "Credit Ratings" below), NW Natural has been able to issue commercial paper and long-term debt at attractive rates. In the event NW Natural is not able to issue new long-term debt due to adverse market conditions or other reasons, NW Natural expects that near-term liquidity needs can be met using internal cash flows, issuing commercial paper, receiving equity contributions from NW Holdings, or drawing upon a committed credit facility. NW Natural also has a universal shelf registration statement filed with the SEC for the issuance of secured and unsecured debt securities.
In the event NW Natural senior unsecured long-term debt ratings are downgraded, or outstanding derivative positions exceed a certain credit threshold, counterparties under derivative contracts could require NW Natural to post cash, a letter of credit, or other forms of collateral, which could expose NW Natural to additional cash requirements and may trigger increases in short-term borrowings while in a net loss position. NW Natural was not required to post collateral at September 30, 2025. See "Credit Ratings" below and Note 15.
Other items that may have a significant impact on NW Natural's liquidity and capital resources include NW Natural's pension contribution requirements and environmental expenditures. For additional information, see Part II, Item 7 "Financial Condition" in the 2024 Form 10-K.
NWN Renewables Gas Purchase Agreements
NWN Renewables is an unregulated subsidiary of NW Natural Holdings established to pursue unregulated RNG activities. In September 2021, a subsidiary of NWN Renewables, Ohio Renewables, and a subsidiary of EDL, a global producer of sustainable distributed energy, executed agreements to secure RNG supply from two production facilities that are designed to convert landfill waste gases to RNG (EDL Facilities). The first facility was completed and commenced delivery of RNG to Ohio Renewables in September 2024. Upon reaching this milestone, Ohio Renewables paid approximately $26.0 million to the EDL subsidiary. The second facility was completed and commenced delivery of RNG to Ohio Renewables in December 2024 at which point Ohio Renewables made an additional payment of $25.4 million to the EDL subsidiary.
Alongside these development agreements, Ohio Renewables and the subsidiary of EDL executed agreements for Ohio Renewables to purchase up to an annual specified amount of RNG produced by the EDL Facilities over a 20-year period at a contractually specified price. We currently estimate the amount of RNG purchases from both facilities based on prices and quantities specified in the agreements to be as follows: approximately $4.7 million in Q4 2025, $18.9 million in 2026, $22.8 million in 2027, $22.8 million in 2028, $24.1 million in 2029 and $532.6 million thereafter. Year-to-date purchases through Q3 totaled $10.5 million, for total expected purchases of $15.2 million in 2025.
NWN Renewables Gas Sale Agreements
Ohio Renewables has contracted to sell RNG produced by the EDL Facilities up to certain specified volumes in each of calendar years 2024 through 2026 to an investment-grade counterparty. We currently estimate RNG volumes to be sold pursuant to this agreement to be approximately 2,430,000 MMbtu over the life of the agreement, provided that such amounts of RNG are produced by the EDL Facilities during that period.
Ohio Renewables additionally has contracted to sell a fixed-volume amount of RNG under a long-term agreement with an investment-grade utility beginning in 2025 and extending through 2042. Amounts to be delivered under this agreement are estimated to be 112,500 MMbtu in 2025, 375,000 MMbtu in 2026, 1,950,000 MMbtu annually in 2027 through 2034, and 2,775,000 MMbtu annually in years 2035 through 2042. Under the current contract, if less than 75% of the contracted volumes of RNG are not delivered on an annual basis, Ohio Renewables is obligated to pay the per MMbtu price for volumes between the amount delivered and 75% of the contracted volumes on an annual basis.
NWN Gas Utility Collective Bargaining Agreement
At December 31, 2024, 626 of NW Natural's natural gas distribution employees were members of the Office and Professional Employees International Union (OPEIU) Local No. 11. In May 2024, union employees ratified a new collective bargaining agreement that took effect on June 1, 2024, expires on May 31, 2028, and is effective thereafter from year to year unless either party serves notice of its intent to negotiate modifications to the collective bargaining agreement. The terms of the collective bargaining agreement include the following items: a 6.0% wage increase effective June 1, 2024 and scheduled wage increases effective December 1 of each subsequent year of 4.0%; a 401(k) contribution of 4% for employees hired after our pension plan was closed on December 31, 2009; and a 401(k) match of 50% of the first 8% of savings.
Short-Term Debt
The primary source of short-term liquidity for NW Holdings is cash balances, dividends from its operating subsidiaries, in particular NW Natural, proceeds from the sale of commercial paper notes, available cash from a multi-year credit facility, and short-term credit facilities it may enter into from time to time.
The primary source of short-term liquidity for NW Natural is from the sale of commercial paper, available cash from a multi-year credit facility, and short-term credit facilities it may enter into from time to time. In addition to issuing commercial paper or entering into bank loans to meet working capital requirements, including seasonal requirements to finance gas purchases and accounts receivable, short-term debt may also be used to temporarily fund capital requirements. For NW Natural, commercial paper and bank loans are periodically refinanced through the sale of long-term debt or equity contributions from NW Holdings. Commercial paper, when outstanding, is sold through two commercial banks under an issuing and paying agency agreement and is supported by one or more unsecured revolving credit facilities. See "Credit Agreements" below.
At September 30, 2025, September 30, 2024 and December 31, 2024, short-term debt consisted of the following:
September 30, 2025 September 30, 2024 December 31, 2024
In millions Balance Outstanding
Weighted Average Interest Rate(1)
Balance Outstanding
Weighted Average Interest Rate(1)
Balance Outstanding
Weighted Average Interest Rate(1)
Commercial Paper Borrowings - NW Holdings(2)
$ 131.2 4.5 % $ - - % $ - - %
Commercial Paper Borrowings - NW Natural 64.3 4.3 % 100.1 5.2 % 136.5 4.8 %
NW Holdings Credit Agreement Loans - - % 59.7 6.0 % 33.6 5.5 %
Total short-term debt $ 195.5 $ 159.8 $ 170.1
(1) Weighted average interest rate on outstanding short-term debt
(2)NW Holdings initiated a commercial paper program in March 2025.
Acquisition Bridge Facility
On January 7, 2025, NW Holdings entered into a 364-Day Term Loan Credit Agreement (the Acquisition Bridge Facility) among NW Holdings, as borrower, certain lenders parties thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, pursuant to which NW Holdings borrowed a $273.0 million senior unsecured term loan (the Bridge Loan), the proceeds of which were
used to finance the SiEnergy acquisition, with any remaining proceeds to be used for working capital needs and for general corporate purposes. The Bridge Loan was repaid in full in March 2025.
Credit Agreements
NW Holdings
At September 30, 2025, NW Holdings had a $200 million senior unsecured sustainability-linked credit agreement, with a feature that allows it to request increases in the total commitment amount, up to a maximum of $300 million, subject to lender approval. In December 2024, the maturity date of the agreement was extended to November 3, 2027, with an available extension of commitments for one additional one-year period, subject to lender approval. On November 3, 2025, NW Holdings and the other parties to the credit agreement amended and restated the agreement to, among other things, increase the total commitment amount to $250 million with a feature that allows it to request increases to the total commitment amount up to a maximum of $350 million (subject to lender approval), to remove sustainability-linked pricing adjustments and to extend the maturity date to November 3, 2030 (or, if such day is not a business day, the immediately preceding business day), with available extensions of commitments for two additional one-year periods, subject to lender approval.
All lenders under the NW Holdings credit agreement are major financial institutions with committed balances and investment grade credit ratings as of September 30, 2025 as follows:
In millions
Lender rating, by category Loan Commitment
AA/Aa $ 200
Total $ 200
NW Holdings did not have any outstanding balances drawn under the NW Holdings credit agreement at September 30, 2025. At September 30, 2024 and December 31, 2024, $59.7 million and $33.6 million were drawn under the NW Holdings credit agreement, respectively.
The existing and amended NW Holdings credit agreements permit the issuance of letters of credit in an aggregate amount of up to $40 million. NW Holdings had no letters of credit issued and outstanding under the existing NW Holdings credit agreement at September 30, 2025 and 2024.
The existing and amended NW Holdings credit agreements require NW Holdings to comply, and to cause certain of its subsidiaries to comply, with various affirmative and negative covenants, including a financial covenant requiring NW Holdings to maintain a consolidated indebtedness to capitalization ratio of 70% or less. Failure to comply with this or other applicable covenants or the occurrence of any other event of default, subject to, in certain instances, specified thresholds, cure periods and exceptions, would entitle the lenders to terminate their lending commitments and accelerate the maturity of all amounts outstanding. NW Holdings was in compliance with this covenant at September 30, 2025 and 2024, with consolidated indebtedness to total capitalization ratios of 59.6% and 56.1%, respectively.
The existing NW Holdings credit agreement did not require NW Holdings to maintain its own credit rating, but required NW Holdings to cause NW Natural to maintain a credit rating. However, the amended credit agreement requires NW Holdings to maintain a credit rating with any one of Standard & Poor's (S&P), Moody's Investors Service, Inc. (Moody's), or Fitch Ratings, Inc. (Fitch) with respect NW Holding's senior, unsecured, non-credit enhanced long-term debt (or, if such debt is not rated, a corporate credit rating) and to notify the lenders of any change in such ratings by such rating agencies. A change in NW Holdings' credit ratings by S&P, Moody's, or Fitch is not an event of default, nor is the maintenance of a specific minimum level of credit rating a condition of drawing upon the credit agreement. Rather, interest rates on any loans outstanding and certain fee amounts under the credit agreements are determined based upon NW Holdings' credit ratings with S&P and Moody's, and therefore a change in such credit ratings may increase or decrease the cost of any loans and the amounts of certain fees under the credit agreements when ratings are changed. See "Credit Ratings" below.
NW Natural
At September 30, 2025, NW Natural had a $400 million senior unsecured sustainability-linked credit agreement, with a feature that allows it to request increases in the total commitment amount, up to a maximum of $600 million, subject to lender approval. In December 2024, the maturity date of the agreement was extended to November 3, 2027 with an available extension of commitments for one additional one-year period, subject to lender approval. On November 3, 2025, NW Natural and the other parties to the credit agreement amended and restated the agreement to, among other things, remove sustainability-linked pricing adjustments and to extend the maturity date to November 3, 2030 (or, if such day is not a business day, the immediately preceding business day), with available extensions of commitments for two additional one-year periods, subject to lender approval.
All lenders under the NW Natural credit agreement are major financial institutions with committed balances and investment grade credit ratings as of September 30, 2025 as follows:
In millions
Lender rating, by category Loan Commitment
AA/Aa $ 400
Total $ 400
NW Natural did not have any outstanding balances drawn under the NW Natural credit agreement at September 30, 2025, September 30, 2024 and December 31, 2024.
The existing and amended NW Natural credit agreements permits the issuance of letters of credit in an aggregate amount of up to $60 million. NW Natural had no letters of credit issued and outstanding under the existing NW Natural credit agreement at September 30, 2025 and 2024.
The existing and amended NW Natural credit agreements also require NW Natural to comply, and to cause certain of its subsidiaries to comply, with various affirmative and negative covenants, including a financial covenant requiring NW Natural to maintain a consolidated indebtedness to total capitalization ratio of 70% or less. Failure to comply with this or other applicable covenants or the occurrence of any other event of default, subject to, in certain instances, specified thresholds, cure periods and exceptions, would entitle the lenders to terminate their lending commitments and accelerate the maturity of all amounts outstanding. NW Natural was in compliance with this financial covenant at September 30, 2025 and 2024, with consolidated indebtedness to total capitalization ratios of 48.9% and 54.6%, respectively.
The existing and amended NW Natural credit agreements also require NW Natural to maintain a credit rating with both S&P and Moody's with respect to NW Natural's senior, unsecured, non-credit enhanced long-term debt (or, if such debt is not rated, corporate credit rating) and notify the lenders of any change in such ratings by such rating agencies. A change in NW Natural's credit ratings by S&P or Moody's is not an event of default, nor is the maintenance of a specific minimum level of credit rating a condition of drawing upon the credit agreement. Rather, interest rates on any loans outstanding and certain fee amounts under the credit agreement are determined based upon NW Natural's credit ratings, and therefore, a change in NW Natural's credit rating may increase or decrease the cost of any loans and the amounts of certain fees under the credit agreement when ratings are changed. See "Credit Ratings"below.
SiEnergy
On January 7, 2025, NW Holdings acquired all of the issued and outstanding limited liability company interests of SiEnergy. SiEnergy's subsidiary, SiEnergy Holdings, had a revolving credit facility (the SiEnergy Holdings Facility) that in aggregate had commitments of $5.0 million, including a letter of credit sublimit of $1.0 million. Loans extended under the SiEnergy Holdings Facility bore interest at a per annum rate equal to the sum of (a) either (i) the Base Rate, as defined in the Amended Credit Agreement (the Base Rate), or (ii) term SOFR with a one-, three- or six-month tenor; plus (b) the Applicable Margin. The Applicable Margin was 0.750% with respect to Base Rate loans and 1.750% with respect to SOFR loans. In August 2025, the SiEnergy Amended Credit Agreement was terminated and associated facilities are no longer available for financing.
On November 3, 2025, SiEnergy Holdings entered into a $75 million senior unsecured credit agreement, with a feature that allows SiEnergy to request increases in the total commitment amount, up to a maximum of $125 million, subject to lender approval. The maturity date of the SiEnergy Holdings credit agreement is November 3, 2030 (or, if such day is not a business day, the immediately preceding business day), with available extensions of commitments for two additional one-year periods, subject to lender approval. All lenders under the SiEnergy credit agreement are major financial institutions with committed balances and investment grade credit ratings as of November 3, 2025.
The SiEnergy Holdings credit agreement permits the issuance of letters of credit in an aggregate amount of up to $20 million.
The SiEnergy Holdings credit agreement requires SiEnergy Holdings to comply, and to cause certain of its subsidiaries to comply, with various affirmative and negative covenants, including a financial covenant requiring SiEnergy Holdings to maintain a consolidated indebtedness to total capitalization ratio of 70% or less. Failure to comply with this or other applicable covenants or the occurrence of any other event of default, subject to, in certain instances, specified thresholds, cure periods and exceptions, would entitle the lenders to terminate their lending commitments and accelerate the maturity of all amounts outstanding.
The SiEnergy Holdings credit agreement also requires SiEnergy Holdings to maintain a credit rating with any one of S&P, Moody's or certain other rating organizations with respect to SiEnergy Holdings' senior, unsecured, non-credit enhanced long-term credit ratings (or, if such debt is not rated, corporate credit rating) and to notify the lenders of any change in such ratings by such rating agencies. A change in SiEnergy Holdings' credit ratings is not an event of default, nor is the maintenance of a specific minimum level of credit rating a condition of drawing upon the credit agreement. Rather, interest rates on any loans outstanding and certain fee amounts under the credit agreement are determined based upon SiEnergy Holdings' credit ratings with S&P and Moody's and therefore, a change in the credit rating may increase or decrease the cost of any loans and the amounts of certain fees under the credit agreement when ratings are changed. See "Credit Ratings" below.
Letters of Credit Facility
In January 2024, NW Natural entered into an Uncommitted Letter of Credit and Reimbursement Agreement (LC Reimbursement Agreement), pursuant to which NW Natural agreed to reimburse each Lender acting as an issuing bank (Issuing Bank) thereunder for disbursements in respect of letters of credit (Letters of Credit) issued pursuant to the LC Reimbursement Agreement from time to time. The Company expects to use Letters of Credit issued under the facility created by the LC Reimbursement Agreement (LC Facility) primarily to support its participation in Washington Climate Commitment Act cap-and-invest program auctions.
Although there is no expressly stated maximum amount of Letters of Credit that can be issued or outstanding under the LC Facility, under current regulatory authority from the OPUC, the aggregate sum of Letters of Credit outstanding and available to be drawn under the LC Reimbursement Agreement may not exceed $100 million at any one time. The Issuing Banks have no commitment to issue Letters of Credit under the LC Facility and will have the discretion to limit and condition the terms for the issuance of Letters of Credit (including maximum face amounts) in their sole discretion.
The LC Reimbursement Agreement requires NW Natural to maintain certain ratings with S&P and Moody's. NW Natural must also notify the Administrative Agent and Lenders of any change in the S&P or Moody's Ratings, although any such change is not an event of default.
The LC Reimbursement Agreement prohibits NW Natural from permitting Consolidated Indebtedness to be greater than 70% of Total Capitalization, each as defined therein and calculated as of the end of each fiscal quarter of NW Natural. Failure to comply with this financial covenant would constitute an Event of Default under the LC Reimbursement Agreement. The occurrence of this or any other Event of Default would entitle the Administrative Agent to require cash collateral for the LC Exposure, as defined in the LC Reimbursement Agreement, and to exercise all other rights and remedies available to it and the Lenders under the Credit Documents, as defined in the LC Reimbursement Agreement, and under applicable law.
In September 2025, NW Natural issued a $28.0 million letter of credit under the LC Facility, which expired October 28, 2025.
Credit Ratings
NW Holdings credit ratings are a factor of liquidity, potentially affecting access to the capital markets. NW Natural and SiEnergy's credit ratings also have an impact on the cost of funds.
The following table summarized NW Holdings' current credit ratings:
S&P
Commercial paper (short-term debt) A-2
Junior subordinated debentures BBB
Issuer credit rating A-
Ratings outlook Stable
The following table summarizes NW Natural's current credit ratings:
S&P Moody's
Commercial paper (short-term debt) A-1 P-2
Senior secured (long-term debt) AA- A2
Senior unsecured (long-term debt) n/a Baa1
Issuer credit rating A+ n/a
Ratings outlook Stable Stable
The following table summarizes SiEnergy's current credit ratings:
S&P
Issuer credit rating (SiEnergy Holding, LLC, formerly Si Investment Co., LLC) BBB+
Issuer credit rating (SiEnergy Gas, LLC, formerly SiEnergy, L.P.) BBB+
Senior secured notes (SiEnergy Gas, LLC, formerly SiEnergy, L.P.) A
Ratings outlook Stable
The above credit ratings and ratings outlook are dependent upon a number of factors, both qualitative and quantitative, and are subject to change at any time. The disclosure of or reference to these credit ratings is not a recommendation to buy, sell or hold NW Holdings or NW Natural securities. Each rating should be evaluated independently of any other rating.
As part of the ring-fencing conditions agreed upon with the OPUC and WUTC in connection with the holding company reorganization, NW Holdings and NW Natural are required to maintain separate credit ratings, long-term debt ratings, and preferred stock ratings, if any.
Long-Term Debt
At September 30, 2025, September 30, 2024 and December 31, 2024, NW Holdings' long-term debt consisted of the following:
September 30, 2025 September 30, 2024 December 31, 2024
In millions Balance Outstanding
Weighted Average Interest Rate(1)
Balance Outstanding
Weighted Average Interest Rate(1)
Balance Outstanding
Weighted Average Interest Rate(2)
NW Natural first mortgage bonds $ 1,354.7 4.6 % $ 1,374.7 4.6 % $ 1,374.7 4.6 %
SiEnergy secured senior notes 185.0 5.6 % - - % - - %
NWN Water term loan 55.0 4.7 % 55.0 4.7 % 55.0 4.7 %
Other water debt 4.2 6.2 6.1
NW Holdings unsecured senior bonds 285.0 5.7 % 150.0 5.8 % 285.0 5.7 %
NW Holdings term loan 50.0 5.2 % - - % - - %
NW Holdings junior subordinated debentures 325.0 7.0 % - - % - - %
Long-term debt, gross 2,258.9 1,585.9 1,720.8
Less: unamortized debt issuance costs 15.1 10.1 10.6
Less: current maturities 115.7 20.8 30.8
Total long-term debt $ 2,128.1 $ 1,555.0 $ 1,679.4
(1) Weighted average interest rate for the nine months ended September 30, 2025 and September 30, 2024
(2) Weighted average interest rate for the year ended December 31, 2024
NW Natural's first mortgage bonds (FMBs) have maturity dates ranging from 2025 through 2053 and interest rates ranging from 2.82% to 7.85%. SiEnergy's secured senior notes have maturity dates ranging from 2030 through 2055 and interest rates ranging from 4.86% to 6.04%. NW Holdings' unsecured senior bonds have maturity dates ranging from 2028 through 2034 and interest rates ranging from 5.52% to 5.86%. NW Holdings' Junior Subordinated Debentures has an interest rate of 7.0% and a maturity date of 2055. At September 30, 2025, NW Holdings and NW Natural had long-term debt outstanding of $2,243.8 million and $1,345.9 million, respectively, which included $15.1 million and $8.8 million of unamortized debt issuance costs at NW Holdings and NW Natural, respectively. Debt of $115.7 million is scheduled to mature in the next twelve months, which consists of $10.0 million at NW Natural, $55.7 million at NWN Water, and $50.0 million at NW Holdings Other. See Part II, Item 7, "Financial Condition-Long-Term Debt" in the 2024 Form 10-K for long-term debt maturing over the next five years.
Summary of Significant Debt Issuances
In millions
Nine months ended September 30, 2025
NW Holdings: Issuance Date Maturity Date Interest Rate Amount
Unsecured Term Loan (a)(b)
January 2025 April 2026
SOFR + 90 bps Spread (c)
$ 50.0
Junior Subordinated Notes (d)(e)
March 2025 September 2055 7.00 % $ 325.0
SiEnergy (f)
Series A Senior Notes August 2025 August 2030 4.86 % $ 50.0
Series B Senior Notes August 2025 August 2035 5.42 % $ 40.0
Series C Senior Notes August 2025 August 2055 6.04 % $ 95.0
Total long-term debt issuance $ 560.0
(a) Proceeds were used for working capital needs and for general corporate purposes.
(b) As of September 30, 2025, the Term Loan was due and payable on April 6, 2026. As of November 3, an amendment to the Term Loan extended the maturity date to August 6, 2026. NW Holdings may prepay the Term Loan without premium or penalty (other than customary breakage costs, if applicable). Amounts prepaid may not be reborrowed.
(c)The Term Loan Agreement bears interest at a per annum rate equal to the sum of (x) either (i) term SOFR with a one-, three- or six-month tenor, plus an adjustment of 0.10%, or (ii) the Alternate Base Rate, as defined in the Term Loan Agreement, plus (y) the Applicable Margin, as defined in the Term Loan Agreement. The Applicable Margin is 0.90% per annum, for term SOFR loans, and 0.00% per annum, for Alternate Base Rate loans.
(d)Proceeds were used to repay the acquisition bridge facility entered into on January 7, 2025 by NW Holdings for the acquisitions of SiEnergy; any remaining proceeds were used for working capital needs and for general corporate purposes.
(e)The Company will pay interest on the Junior Subordinated Debentures (i) from and including the date of original issuance to, but not including, September 15, 2035, at an annual rate of 7.0% and (ii) from and including September 15, 2035, during each Interest Reset Period at an annual rate equal to the Five-Year Treasury Rate as of the most recent Reset Interest Determination Date plus 2.701%.
(f) Proceeds were used to repay SiEnergy's $148.8 million remaining balance on the Delayed Draw Term Loan Facility.
Summary of Significant Debt Extinguishments and Repayments
NW Holdings
In March 2025, the Acquisition Bridge Facility used to finance the acquisition of SiEnergy was repaid in full.
NW Natural
In September 2025, the $20.0 million first mortgage bond 7.72% Series Due 2025 was repaid in full.
SiEnergy
In August 2025, the proceeds of the August 2025 Notes were used to extinguish the $148.8 million remaining balance of the SiEnergy Delayed Draw Term Loan Facility (SiEnergy DDTLF) ($148.8 million) and the SiEnergy Revolving Credit Facility was terminated. The SiEnergy DDTLF and Revolving Credit Facility under SiEnergy's Credit Agreement were acquired by NW Holdings on January 7, 2025 as part of the acquisition of all of the issued and outstanding limited liability company interests of SiEnergy.
The SiEnergy DDTLF had initial aggregate commitments, as amended, of $200.0 million. The SiEnergy DDTLF was scheduled to mature on December 22, 2026. Loans extended under the SiEnergy DDTLF bore interest at a per annum rate equal to the sum of (a) either (i) the Base Rate, as defined in the Amended Credit Agreement (the Base Rate), or (ii) term SOFR with a one-, three- or six-month tenor; plus (b) the Applicable Margin. The Applicable Margin was 0.750% with respect to Base Rate loans and 1.750% with respect to SOFR loans.
NWN Water Interest Rate Swap Agreement
In January 2023, NWN Water entered into an interest rate swap agreement with a major financial institution for $55.0 million that effectively converted variable-rate debt to a fixed rate of 3.8%. Interest payments made between the effective date and expiration date are hedged by the swap agreement. The interest rate swap agreement expires in June 2026, along with the variable-rate debt.
Bankruptcy Ring-fencing Restrictions
As part of the ring-fencing conditions agreed upon with the OPUC and WUTC, NW Natural is required to have one director who is independent from NW Natural management and from NW Holdings and to issue one share of NW Natural preferred stock to an independent third party. NW Natural was in compliance with both of these ring-fencing provisions as of September 30, 2025. NW Natural may file a voluntary petition for bankruptcy only if approved unanimously by the Board of Directors of NW Natural, including the independent director, and by the holder of the preferred share.
Contingent Liabilities
Loss contingencies are recorded as liabilities when it is probable a liability has been incurred and the amount of the loss is reasonably estimable in accordance with accounting standards for contingencies. See "Application of Critical Accounting Policies and Estimates" in the 2024 Form 10-K. At September 30, 2025, NW Natural's total estimated liability related to environmental sites is $145.6 million. See "Results of Operations-Regulatory Matters-Rate Mechanisms-Environmental Cost Deferral and Recovery" in the 2024 Form 10-K and Note 17.
APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
In preparing financial statements in accordance with U.S. GAAP, management exercises judgment to assess the potential outcomes and related accounting impacts in the selection and application of accounting principles, including making estimates and assumptions that affect reported amounts of assets, liabilities, revenues, expenses, and related disclosures in the financial statements. Management considers critical accounting policies to be those which are most important to the representation of financial condition and results of operations and which require management's most difficult and subjective or complex judgments, including accounting estimates that could result in materially different amounts if reported under different conditions or if they used different assumptions. Our most critical estimates and judgments for both NW Holdings and NW Natural include accounting for:
•regulatory accounting;
•revenue recognition;
•derivative instruments and hedging activities;
•pensions and postretirement benefits;
•income taxes;
•environmental contingencies; and
•impairment of long-lived assets and goodwill.
There have been no material changes to the information provided in the 2024 Form 10-K with respect to the application of critical accounting policies and estimates. See Part II, Item 7, "Application of Critical Accounting Policies and Estimates," in the 2024 Form 10-K.
Management has discussed its current estimates and judgments used in the application of critical accounting policies with the Audit Committees of the Boards of NW Holdings and NW Natural. Within the context of critical accounting policies and estimates, management is not aware of any reasonably likely events or circumstances that would result in materially different amounts being reported. For a description of recent accounting pronouncements that could have an impact on financial condition, results of operations or cash flows, see Note 2.
Northwest Natural Holding Company published this content on November 05, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 05, 2025 at 18:35 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]