What changed in this filing

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Item 1. Business

2022-02-25 compared with 2021-02-26 · 74 added, 109 removed, 289 unchanged (39% of the section changed)

On October 1, 2018, we completed a reorganization into a holding company structure.

In this reorganization, shareholders of NW Natural (the predecessor publicly held parent company) became shareholders of NW Holdings, on a one-for-one basis, with the same number of shares and same ownership percentage as they held in NW Natural immediately prior to the reorganization.

NW Natural became a wholly-owned subsidiary of NW Holdings.

Additionally, certain subsidiaries of NW Natural were transferred to NW Holdings.

As required under generally accepted accounting principles, these subsidiaries are presented as discontinued operations in the 2018 consolidated results of NW Natural within this report.

NW Holdings is a holding company headquartered in Portland, Oregon and owns NW Natural, NW Natural Water Company, LLC (NWN Water), and other businesses and activities.

NW Holdings is a holding company headquartered in Portland, Oregon and owns NW Natural, NW Natural Water Company, LLC (NWN Water), NW Natural Renewables Holdings, LLC, a non-regulated subsidiary established to pursue non-regulated renewable natural gas activities, and other businesses and activities.

NW Natural is NW Holdings’ largest subsidiary.

NW Natural owns NW Natural RNG Holding Company, LLC, a holding company established to invest in the development and procurement of renewable natural gas.

NW Natural owns 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.

NW Natural distributes natural gas to residential, commercial, and industrial customers in Oregon and southwest Washington.

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NW Natural's natural gas distribution activities are reported in the natural gas distribution (NGD) segment.

All other business activities, including certain gas storage activities, water businesses, and other investments and activities are aggregated and reported as "other" at their respective registrant.

In addition, NW Holdings reported discontinued operations results related to the sale of Gill Ranch Storage, LLC (Gill Ranch).

NW Natural Gas Storage, LLC (NWN Gas Storage), an indirect wholly-owned subsidiary of NW Holdings, entered into a Purchase and Sale Agreement during the second quarter of 2018 that provides for the sale of all membership interests in Gill Ranch.

Gill Ranch owns a 75% interest in the natural gas storage facility located near Fresno, California known as the Gill Ranch Gas Storage Facility.

On December 4, 2020, NWN Gas Storage closed the sale of all of the membership interests in Gill Ranch.

See Note 19 of the Consolidated Financial Statements in Item 8 of this report for more information.

All other business activities, including certain gas storage activities, water businesses, non-regulated renewable natural gas activities and other investments and activities are aggregated and reported as "other" at their respective registrant.

NATURAL GAS DISTRIBUTION (NGD) SEGMENT

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NW Natural has been allocated an exclusive service territory by the Oregon Public Utility Commission (OPUC) and Washington Utilities and Transportation Commission (WUTC), which includes the major population centers in western Oregon, including the Portland metropolitan area, most of the Willamette Valley, the Coastal area from Astoria to Coos Bay, and portions of Washington along the Columbia River.

Portland serves as a major West Coast port and is a key distribution center.

Major businesses located in NW Natural's service territory include retail, manufacturing, and high-technology industries.

The NGD business serves residential, commercial, and industrial customers with no individual customer accounting for more than 10% of NW Natural's or NW Holdings' revenues.

On an annual basis, residential and commercial customers typically account for approximately 60% of NGD volumes delivered and approximately 90% of margin.

On an annual basis, residential and commercial customers typically account for approximately 60% of NGD volumes delivered and approximately 90% of NGD margin.

Industrial and other customers largely account for the remaining volumes and margin.

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Industrial and large commercial customers may also select between firm and interruptible service levels, with firm services generally providing higher profit margins compared to interruptible services.

To help manage gas supplies, industrial tariffs are designed to provide some certainty regarding industrial customers' volumes by requiring an annual service election, special charges for changes between elections, and in some cases, a minimum or maximum volume requirement before changing options.

To help manage gas supplies, industrial tariffs are designed to provide some certainty regarding industrial customers' volumes by requiring an annual service election, special rates or possible restrictions for changes between elections, and in some cases, a minimum or maximum volume requirement before changing options.

Customer growth rates for natural gas utilities in the Pacific Northwest historically have been among the highest in the nation due to lower market saturation as natural gas became widely available as a residential heating source after other fuel options.

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Continued customer growth is closely tied to the comparative price of natural gas to electricity and fuel oil and the economic health of Portland, Oregon and Vancouver, Washington.

We believe there is potential for continued growth as natural gas is a preferred direct energy source due to its affordability, reliability, comfort, convenience, and clean qualities.

We believe there is potential for continued growth as natural gas is a preferred direct energy source due to its affordability, reliability, comfort, and convenience.

Competitive Conditions

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Recall agreements 0.4 4 %

Peak day citygate deliveries 0.1 1 %

Total 10.0 100 %

The OPUC and WUTC have Integrated Resource Planning (IRP) processes in which utilities define different growth scenarios and corresponding resource acquisition strategies in an effort to evaluate supply and demand resource requirements, consider uncertainties in the planning process and the need for flexibility to respond to changes, and establish a plan for providing reliable service at the least cost.

The OPUC and WUTC have Integrated Resource Planning (IRP) processes in which utilities define different growth scenarios and corresponding resource and compliance strategies in an effort to evaluate supply and demand resource and compliance requirements, consider uncertainties in the planning process and the need for flexibility to respond to changes, and establish a plan for providing reliable service at the least cost.

NW Natural generally files a full IRP biennially for Oregon and Washington with the OPUC and the WUTC, respectively, and files updates between filings.

The OPUC acknowledges NW Natural's action plan, whereas the WUTC provides notice that the IRP

has met the requirements of the Washington Administrative Code.

The OPUC acknowledges NW Natural's action plan, whereas the WUTC provides notice that the IRP has met the requirements of the Washington Administrative Code.

OPUC acknowledgment of the IRP does not constitute ratemaking approval of any specific resource acquisition strategy or expenditure.

However, the OPUC Commissioners generally indicate that they would give considerable weight in prudence reviews to actions consistent with acknowledged plans.

The WUTC has indicated the IRP process is one factor it will consider in a prudence review.

For additional information see Part II, Item 7, "Results of Operations— Regulatory Matters ."

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Rocky Mountain region as well as other regions in North America.

NW Natural has also announced its intent to incorporate renewable natural gas (RNG) into its supply portfolio.

See " Environmental Matters " below.

NW Natural supplements firm gas supply purchases with gas withdrawals from gas storage facilities, including underground reservoirs and LNG storage facilities.

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Gas supply contracts are renewed or replaced as they expire.

During 2020, no individual supplier provided 10% or more of the NGD business gas supply requirements.

During 2021, there was one supplier that provided 10% of the NGD business gas supply requirements.

No other individual supplier provided 10% or more of the NGD business gas supply requirements.

Gas Cost Management

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The result has been a cost-neutral way to reduce carbon emissions associated with our natural gas supply.

In addition, NW Natural is actively working to procure RNG contracts under Oregon Senate Bill 98, and is engaging in longer-term efforts to increase the amount of RNG on our system and explore the development of renewable hydrogen through power to gas.

See " Environmental Matters " below.

NW Natural is focused on taking steps to lower its emissions on behalf of customers by purchasing environmental attributes that are generated by the production of renewable natural gas (RNG).

Under Oregon Senate Bill 98, NW Natural can purchase or invest in RNG facilities, which generate these environmental attributes known as Renewable Thermal Certificates (RTCs).

The RTCs work like renewable energy certificates, or RECs, used in electricity markets.

RTCs are verified and certified by the Midwest Renewable Energy Tracking System (M-RETS).

The M-RETS Renewable Thermal Tracking System issues one RTC for every dekatherm of renewable natural gas.

Transportation of Gas Supplies

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Since the 1980s, NW Natural has taken a proactive approach to replacement programs and partnered with the OPUC and WUTC on progressive regulation to further safety and reliability efforts for the distribution system.

In the past, NW Natural had a cost recovery program in Oregon that encompassed programs for bare steel replacement, transmission pipeline integrity management, and distribution pipeline integrity management as appropriate.

In the past, NW Natural had a cost recovery program in Oregon that encompassed programs for cast iron replacement, bare steel replacement, transmission integrity management, and distribution integrity management programs as appropriate.

Natural gas distribution businesses are likely to be subject to greater federal and state regulation in the future.

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Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) are currently under development.

In 2016, PHMSA issued safety requirements for natural gas transmission pipelines.

In 2019, PHMSA issued the first of three portions of these regulations which went into effect on July 1, 2020 and include up to a 15-year timeline for compliance.

The remaining portions of the regulations are anticipated to be issued in 2021.

In 2016, PHMSA issued a notice of proposed rulemaking titled the "Safety of Gas Transmission Pipelines:

MAOP Reconfirmation, Expansion of Assessment Requirements, and Other Related Amendments." In 2019, PHMSA issued the first of three portions of the rulemaking which went into effect on July 1, 2020 and includes up to a 15-year timeline for compliance.

The gas gathering rule was issued in late 2021 and the leak detection rule is expected to be issued in 2022.

NW Natural intends to continue to work diligently with industry associations as well as federal and state regulators to ensure the safety of the system and compliance with new laws and regulations.

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In May 2019, NW Natural completed an expansion of its existing gas storage facility near Mist, Oregon.

The North Mist facility provides long-term, no-notice underground gas storage service and is dedicated solely to Portland General Electric (Portland General) under a 30-year contract with options to extend up to an additional 50 years upon mutual agreement of the parties.

Portland General uses the facility to support its gas-fired electric power generation facilities, which incorporate renewable energy into the electric grid.

North Mist includes a new reservoir providing 4.1 Bcf of available storage, an additional compressor station with a contractual capacity of 120,000 dekatherms of gas per day, no-notice service that can be drawn on rapidly, and a 13-mile pipeline to connect to Portland General's Port Westward gas plants in Clatskanie, Oregon.

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, which backs up PGE's variable load of renewable energy on the electric grid.

North Mist includes a reservoir providing 4.1 Bcf of available storage, an additional compressor station with a contractual capacity of 120,000 dekatherms of gas 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.

Upon placement into service in May 2019, the facility was included in rate base under an established tariff schedule with revenues recognized consistent with the schedule.

Billing rates will be updated annually to the current depreciable asset level and forecasted operating expenses.

While there are additional expansion opportunities in the Mist storage field, further development is not contemplated at this time and any expansion would be based on market demand, cost effectiveness, available financing, receipt of future permits, and other rights.

While there are additional expansion opportunities in the Mist storage field, any expansion would be based on market demand, cost effectiveness, available financing, receipt of future permits, and other rights.

Certain businesses and activities of NW Holdings and NW Natural are aggregated and reported as other for segment reporting purposes.

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The remaining 5.7 Bcf of the facility is contracted with other utilities and third-party marketers with these results reported in other.

In 2021, NW Natural began to utilize 1 Bcf of increased storage capacity realized through reservoir expansion during more than 15 years of delta pressure operations.

This change increased the working gas capacity from 16 Bcf to 17 Bcf.

The overall facility consists of seven depleted natural gas reservoirs, 22 injection and withdrawal wells, a compressor station, dehydration and control equipment, gathering lines, and other related facilities.

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The interstate storage services are offered under a limited jurisdiction blanket certificate issued by FERC.

Under NW Natural's interstate storage certificate with FERC, NW Natural is required to file either a petition for rate approval or a cost and revenue

study every five years to change or justify maintaining the existing rates for the interstate storage service.

Under NW Natural's interstate storage certificate with FERC, NW Natural is required to file either a petition for rate approval or a cost and revenue study every five years to change or justify maintaining the existing rates for the interstate storage service.

Intrastate firm storage services in Oregon are offered under an OPUC-approved rate schedule as an optional service to certain eligible customers.

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These include the following businesses and activities aggregated under NW Holdings:

• NW Natural Water Company, LLC (NWN Water) and its water and wastewater utility operations and acquisition activities;

• an equity method investment in Trail West Holdings, LLC (TWH);

• NW Natural Water Company, LLC (NWN Water) and its water and wastewater utility operations;

• NW Natural Renewables Holdings, LLC and its non-regulated renewable natural gas activities;

• a minority interest in the Kelso-Beaver Pipeline held by our wholly-owned subsidiary NNG Financial Corporation (NNG Financial);

• holding company and corporate activities as well as adjustments made in consolidation.

On August 6, 2020, NWN Energy completed the sale to an unrelated third party of its interest in TWH.

See Note 14 of the Consolidated Financial Statements in Item 8 of this report for more information.

• holding company and corporate activities, including business development activities, as well as adjustments made in consolidation.

Water Utilities

After a comprehensive strategic planning process, in December 2017, we entered the water utility sector by announcing several acquisitions, which NWN Water subsequently closed.

Through December 31, 2020, NWN Water serves a total of approximately 63,000 people through 26,000 water and wastewater connections in the Pacific Northwest and Texas, with an aggregate investment of nearly $110 million.

NWN Water serves a total of approximately 80,000 people through approximately 33,000 water and wastewater connections in the Pacific Northwest and Texas.

NWN Water has additional signed acquisition agreements for water and wastewater utilities in the Pacific Northwest, Texas and Arizona, which pending transactions are subject to state utility commission approvals, and other closing conditions, and are expected to close during 2022.

Once closed, NWN Water expects to serve approximately 145,000 customers through an aggregate total of approximately 60,000 water and wastewater connections in the Pacific Northwest, Texas and Arizona, with a cumulative investment in the water and wastewater sectors of approximately $215 million.

NW Holdings continues to pursue additional acquisitions in a disciplined manner.

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Entities generally operate in exclusive service territories with no direct competitors.

Water distribution customer rates are regulated by state utility commissions while the wastewater businesses we own currently are not rate regulated by utility commissions.

Water distribution customer rates are regulated by state utility commissions while the wastewater businesses we own consist of some state regulated systems and some systems that are not rate regulated by utility commissions.

NW Natural Renewables

NW Natural Renewables is a newly formed subsidiary of NW Natural Holdings established to pursue non-regulated renewable natural gas activities.

NW Natural Renewables is focused on providing cost-effective solutions to decarbonize a variety of sectors utilizing existing waste streams and renewable energy resources.

NW Natural Renewables' first project is with a subsidiary of EDL, a global producer of sustainable distributed energy.

In September 2021, a subsidiary of NW Natural Renewables and a subsidiary of EDL executed agreements, whereby the subsidiary of NW Natural Renewables committed $50 million toward the development of two production facilities that are designed to convert landfill waste gases to RNG and connect gas production to existing regional pipeline networks.

Testing and commissioning of the production facilities is expected to occur in 2023.

Alongside these development agreements, a subsidiary of NW Natural Renewables and a subsidiary of EDL executed agreements designed to secure a 20-year supply of RNG for NW Natural Renewables.

ENVIRONMENTAL MATTERS

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Greenhouse Gas Matters

We recognize certain of our businesses, including our natural gas business, are likely to be affected by requirements to address greenhouse gas emissions.

Future federal, state or local legislation or regulation may seek to limit emissions of greenhouse gases, including both carbon dioxide (CO2) and methane.

These potential laws and regulations may require certain activities to reduce emissions and/or increase the price paid for energy based on its carbon content.

Current federal rules require the reporting of greenhouse gas (GHG) emissions.

In September 2009, the EPA issued a final rule requiring the annual reporting of greenhouse gas emissions from certain industries, specified large GHG emission sources, and facilities that emit 25,000 metric tons or more of CO2 equivalents per year.

NW Natural began reporting emission information in 2011.

Under this reporting rule, local natural gas distribution companies like NW Natural 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.

The Oregon and Washington state governments have identified emission reduction as a priority and continue to consider various GHG reduction initiatives.

On March 10, 2020, the governor of Oregon issued an executive order (EO) establishing GHG emissions reduction goals of at least 45% below 1990 emission levels by 2035 and at least 80% below 1990 emission levels by 2050 and directed state agencies and commissions to facilitate such GHG emission goals targeting a variety of sources and industries.

Although the EO does not specifically direct actions of natural gas distribution businesses, the OPUC is directed to prioritize proceedings and activities that advance decarbonization in the utility sector, mitigate energy burden experienced by utility customers and ensure system reliability and resource adequacy.

The EO also directs other agencies to cap and reduce GHG emissions from transportation fuels and all other liquid and gaseous fuels, including natural gas, adopt building energy efficiency goals for new building construction, reduce methane emissions from landfills and food waste, and submit a proposal for adoption of state goals for carbon sequestration and storage by Oregon’s forest, wetlands and agricultural lands.

These agencies and commissions are currently engaged in various stages of their rulemaking processes and are currently expected to complete those processes in the next 12 to 24 months.

NW Natural is actively engaged with Oregon state regulatory entities and holds a seat on the Oregon Department of Environmental Quality (DEQ) rules advisory committee, which is considering the cap and reduce rules.

In Washington, where approximately 10% of NW Natural’s revenues and 22% of new meters are derived, policy focused on the goal of reducing GHGs and enhancing energy efficiency measures for commercial and residential energy customers have been enacted by the Washington State Building Code Council.

Effective February 1, 2021, building codes in Washington state require new residential and commercial construction to achieve higher levels of energy efficiency based on specified carbon emissions assumptions, which are expected to calculate on-site electric appliances to have lower GHG emissions than comparable gas appliances, potentially increasing the cost of new building construction incorporating natural gas.

Although legislation with similar goals has previously been pursued unsuccessfully in Washington, it is likely that legislatures nationwide and in our service territory will continue to work to combat climate change through legislative action.

NW Natural is working with policymakers and a coalition of utilities in Washington to help them understand the role direct use natural gas, and in the coming years renewable natural gas and hydrogen, may play in aggressively pursuing more effective policies to reduce greenhouse gases while preserving reliability, resiliency, energy choice and energy affordability.

In addition to legislative activities at the state level, ballot measures may be proposed by advocacy groups.

Some local and county governments in the United States also have been proposing or passing renewable energy resolutions, restrictions, taxes or fees with advocates seeking to accelerate renewable energy goals.

A number of cities across the country, and several in our service territory are currently considering such actions aimed at formalizing climate action goals and driving down GHG emissions, including limitations or bans on the use of natural gas in new construction.

NW Natural is actively engaged with such cities and local governments in our service territory and is working to help these communities understand the ways in which the natural gas system, and renewable fuels on the horizon, can help cities meet their decarbonization goals.

With the new United States presidential administration, we also expect new federal rules and frameworks related to GHG emissions.

While the outcome of these federal, state or local climate change policy developments cannot be determined at this time, these initiatives could produce a number of results including new regulations, legal actions, additional charges to fund energy efficiency activities, or other regulatory actions.

The adoption and implementation of regulations limiting GHG emissions could require NW Natural to incur compliance costs associated with our customers’ use, which we currently expect to recover through rates and therefore may result in an increase in the prices charged to customers, and a potential decline in the demand for natural gas.

In 2017, NW Natural initiated a multi-pronged, multi-year strategy to accelerate and deliver greater GHG emission reductions in the communities we serve.

Key components of this strategy include customer energy efficiency, continued adoption of NW Natural's voluntary Smart Energy carbon offset program, and seeking to incorporate RNG and hydrogen into our gas supply.

RNG is produced from organic materials including food, agricultural and forestry waste, wastewater, or landfills.

Methane is captured from these organic materials as they decompose and is conditioned to pipeline quality, so it can be added into the existing natural gas system, reducing net GHG emissions.

In 2019, Oregon Senate Bill 98 (SB 98) was signed into law enabling NW Natural to procure RNG on behalf of customers and provided voluntary targets that would allow us to make qualified investments and purchase RNG from third parties such that up to 30% of the gas distributed to retail customers is RNG by 2050, and creating a limit of 5% of a utility's revenue requirement that can be used to cover the incremental cost of RNG.

The bill was signed into law by the governor in July 2019, and subsequently, the OPUC adopted final rules in July 2020.

NW Natural is actively working to procure RNG supply for customers, and is engaging in longer-term efforts to increase the amount of RNG on our system and explore the development of renewable hydrogen through power to gas.

In December 2020, NW Natural announced a partnership with BioCarbN, a developer and operator of sustainable infrastructure projects, to convert methane into RNG.

Under this partnership, NW Natural has the ability to invest up to an estimated $38 million in four separate RNG development projects that will access biogas derived from water treatment at Tyson Foods' processing plants, subject to approval by all parties.

In December 2020, NW Natural exercised its option for the first development project in Nebraska,

initiating investment in an estimated $8 million project, which we expect will begin producing RNG in late 2021.

This is the company’s first investment under Oregon SB 98.

NW Natural continues to take proactive steps in seeking to reduce GHG emissions in our region and is proactively communicating with local, state and federal governments and communities about those steps.

We believe that NW Natural has a vital role in providing energy to the communities we serve.

Each year, NW Natural delivers more energy in Oregon than any other utility.

The sales of natural gas to our residential and commercial customers account for approximately 6% of Oregon’s GHG emissions according to data for recent years from the State of Oregon Department of Environmental Quality In-Boundary GHG Inventory.

We intend to continue to provide this necessary energy to our communities and to use our modern pipeline system to help the Pacific Northwest transition to a clean energy future.

For information concerning greenhouse gas matters, see Part II, Item 7, “Results of Operations—Environmental, Legislation and Regulation Matters.”

HUMAN CAPITAL

Our core values of integrity, safety, caring, service ethic, and environmental stewardship guide how we engage with customers, stakeholders, shareholders, and communities.

We actively work to foster these values in our employee culture and to nurture an inclusive and equitable environment that provides opportunities, prioritizes health and safety, and supports growth and learning.

We aim to recruit and retain employees who share our core values and reﬂect our communities.

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As part of our commitment to employee health and safety, we maintain regular training programs, emergency preparedness procedures, and speciﬁc training and procedures to identify hazards and handle high-risk emergency situations.

Employees complete hands-on, scenario-based training at our training facility in Oregon that allows employees to experience realistic situations in a controlled environment.

We also host natural gas safety training events for ﬁrst responders, which prepares our teams to deliver an integrated, seamless response in the event of an emergency that involves or affects the natural gas system.

Our COVID-19 response is just one example of our safety culture in action.

Employees complete classroom instruction and hands-on, scenario-based training at our training facility in Oregon that allows employees to experience realistic situations in a controlled environment.

We also host natural gas safety training events for ﬁrst responders, which prepare those first responders and NW Natural field employees to deliver an integrated, seamless response in the event of an emergency that involves or affects the natural gas system.

We navigated, and continue to navigate, the COVID-19 pandemic with limited class sizes and online training to help keep people safe.

We also implemented a new learning management system that went live in early 2021 and provides more efficiency and flexibility in how we train.

Our ongoing COVID-19 response is just one example of our safety culture in action.

As a critical infrastructure energy company that provides an essential service to our customers, NW Natural has well-defined emergency response command structures and protocols.

In response to the COVID-19 pandemic, NW Natural mobilized its incident command team and business continuity plans in early March 2020, and continues to operate under these structures and protocols, with a focus on the safety of our employees and the people, business partners, and communities we serve.

NW Natural has generally suspended business travel

out of our service territory and implemented work-from-home plans for employees wherever possible.

For employees whose role requires them to work in the field, we are following CDC, OSHA, and state specific guidance.

Measures include:

In response to the COVID-19 pandemic, NW Natural initially mobilized its incident command team and business continuity plans in early March 2020 and initiated similar procedures at our water utilities, with a focus on the safety of our employees and the people, business partners, and communities we serve.

We continue to monitor and respond to developments related to the COVID-19 pandemic.

For employees whose role requires them to work in the field or onsite, we are following CDC, OSHA, and state specific guidance.

Measures continue to include:

following social distancing guidelines;

use of personal protective equipment (PPE) including masks, face coverings and gloves;

use of personal protective equipment (PPE);

enhanced sanitizing protocols;

requiring employee health screenings prior to entering a NW Natural facility;

employee health screening protocols;

remote and flexible work arrangements where possible;

and other measures intended to mitigate the spread of this disease and keep our employees and customers safe and informed.

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As an essential service provider, our water and natural gas utility businesses continue to serve our customers without interruption.

Our experience and continuing focus on workplace safety have enabled us to preserve business continuity without sacrificing our commitment to the safety of our employees and the people, business partners, and communities served.

Our experience and approach to workplace safety have enabled us to preserve business continuity while continuing to focus on our commitment to the safety of our customers, business partners and the communities we serve.

The COVID-19 pandemic also presents challenges for employees’ emotional well-being and ability to balance work and family responsibilities.

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processes to facilitate flexible and reduced-schedule work where possible;

and virtual ergonomic assistance to help remote employees work safely at home.

virtual ergonomic assistance to help remote employees work safely at home;

and support and access to obtain vaccines.

Employee Benefits

To attract employees and meet the needs of our workforce, NW Natural strives to offer competitive benefits packages to employees.

To attract employees and meet the needs of our workforce, NW Natural strives to offer competitive compensation and benefits packages to employees.

The benefits package options vary depending on type of employee and date of hire.

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healthcare and other insurance coverages, wellness resources, retirement and savings plans, paid time off programs and flexible work schedules, culture and community-focused resources and opportunities, and employee recognition programs and discounts.

Employee Development

NW Natural seeks to provide its employees with growth and development opportunities through formal and informal programs designed to build skills and relationships.

These programs include:

Talent Attraction and Development

In order to implement our business strategy and serve our customers, we depend upon our continuing ability to attract and retain diverse, talented professionals and a technically skilled workforce, and being able to transfer the knowledge and expertise of our workforce to new and increasingly diverse employees as our largely older workforce retires.

A significant portion of our workforce is currently eligible or will reach retirement eligibility within the next five years, and therefore, we are focused on efforts to attract, train, and retain appropriately qualified and skilled workers to prevent loss of institutional knowledge or skills gaps.

NW Natural seeks to provide its employees with growth and development opportunities through programs designed to build skills and relationships.

These programs currently include:

(i) a culturally relevant mentoring program that creates opportunities for career growth by building relationships;

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(iii) an internal class that provides participants with a big-picture understanding of the industry and company operations, equipping them to see how they contribute to NW Natural’s success and identify opportunities for career growth;

(iv) internal and continuing educational curriculum relevant to areas of expertise;

(iv) internal and external continuing educational courses relevant to areas of expertise;

and (v) ongoing management and leadership training programs.

We regularly monitor employee engagement and satisfaction through a variety of tools, including our annual engagement survey that is designed to enable company leaders to gather valuable feedback and guidance from employees.

Diversity, Equity and Inclusion

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This commitment to diversity also extends to leadership positions, including members of the officer team and the Board of Directors.

Recruiting, promoting, and retaining diverse talent, building inclusive teams, and creating a culture that embraces differences are at the core of our workforce strategy.

To attract diverse candidates, we work with community groups and organizations to help promote awareness of job opportunities within diverse communities.

In 2020, we launched employee resource groups for Asian-American, African-American, Veteran, Latinx, and LGBT+ employees, which groups are in addition to our existing Women’s Network.

We also continue to emphasize employee education, including diversity training for employees at the manager level and above, diversity training as part of new hire onboarding, and other diversity, equity, and inclusion education that occurs throughout the year.

Our efforts in recruiting, promoting, and retaining diverse talent, building inclusive teams, and creating a culture that embraces differences are at the core of our workforce strategy.

To attract diverse candidates, we work with community partners to help promote awareness of job opportunities within diverse communities.

We have employee-led groups that develop programs and activities that build awareness around issues important to their co-workers, families, customers, and our community.

Groups include the Diversity, Equity & Inclusion Council, African American, Rainbow Alliance (LGBTQ+), Veterans, Somos Unidos (Latinx), and Asian American employee resource groups, Wellness Advisory Committee, Women’s Network, and Sustainability and Equity Engagement Team.

We also continue to emphasize diversity, equity and inclusion values through employee training and education, including expanded diversity training as part of new hire onboarding and other diversity, equity, and inclusion education that occurs throughout the year.

An area of focus going forward is to understand and increase awareness of internal systems and structures that could limit representation and equity for underrepresented employees.

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In addition, we make available, free of charge, on our website ( www.nwnaturalholdings.com ), our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) and proxy materials filed under Section 14 of the Securities Exchange Act of 1934, as amended (Exchange Act), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

We intend to use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.

Accordingly, investors should monitor our

website, in addition to following our press releases, SEC filings and public conference calls and webcasts.

We have included our website address as an inactive textual reference only.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business