What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-24 compared with 2022-02-25 · 334 added, 206 removed, 1985 unchanged (21% of the section changed)

147 unchanged sentences

Revenue taxes 41,826 34,740 30,291

Depreciation and amortization 113,534 103,683 91,496

Depreciation 116,707 113,534 103,683

Other operating expenses 3,621 3,897 3,701

6 unchanged sentences

Net income from continuing operations 86,303 78,666 70,273

Income (loss) from discontinued operations, net of tax — 6,508 ( 3,576 )

Income from discontinued operations, net of tax — — 6,508

Net income 86,303 78,666 76,781

3 unchanged sentences

Amortization of non-qualified employee benefit plan liability, net of taxes of $( 286 ) for 2022, $( 320 ) for 2021, and $( 244 ) for 2020

Unrealized gain on interest rate swaps, net of taxes of $( 47 ) for 2022

Comprehensive income $ 91,422 $ 80,164 $ 74,612

5 unchanged sentences

Diluted 2.54 2.56 2.30

Earnings (loss) from discontinued operations per share of common stock:

Earnings from discontinued operations per share of common stock:

Basic $ — $ — $ 0.21

16 unchanged sentences

Inventories 87,096 57,262

Income taxes receivable — 6,000

Other current assets 61,286 59,288

58 unchanged sentences

Shares issued pursuant to equity based plans 2,469 — — 2,469

Issuance of common stock, net of issuance costs 92,956 — — 92,956

Reclassification of tax effects from the TCJA — 1,366 ( 1,366 ) —

Balance at December 31, 2020 565,112 336,523 ( 12,902 ) 888,733

4 unchanged sentences

Shares issued pursuant to equity based plans 4,543 — — 4,543

Issuance of common stock, net of issuance costs 17,501 — — 17,501

Balance at December 31, 2021 590,771 355,779 ( 11,404 ) 935,146

14 unchanged sentences

Adjustments to reconcile net income to cash provided by operations:

Depreciation and amortization 113,534 103,683 91,496

Depreciation 116,707 113,534 103,683

Regulatory amortization of gas reserves 5,589 13,897 17,779

4 unchanged sentences

Environmental remediation expense 12,389 9,938 9,691

Regulatory disallowance of pension costs — — 10,500

Gain on sale of discontinued operations, net of tax — — ( 5,902 )

Asset optimization revenue sharing bill credits ( 41,102 ) ( 9,053 ) ( 16,970 )

Other 21,558 20,622 10,028

7 unchanged sentences

Decoupling mechanism 10,922 ( 5,206 ) 2,884

Cloud-based software ( 23,908 ) ( 7,407 ) ( 4,265 )

Other, net ( 12,351 ) ( 18,662 ) 1,340

31 unchanged sentences

Interest paid, net of capitalization $ 50,823 $ 43,719 $ 42,651

Income taxes paid (refunded) 10,555 13,644 ( 96 )

Income taxes paid, net of refunds 2,779 10,555 13,644

See Notes to Consolidated Financial Statements

10 unchanged sentences

Revenue taxes 41,627 34,600 30,291

Depreciation and amortization 110,504 101,586 90,405

Depreciation 112,957 110,504 101,586

Other operating expenses 3,135 3,332 3,232

79 unchanged sentences

Dividends on common stock — ( 55,355 ) — ( 55,355 )

Capital contribution from parent 93,105 — — 93,105

Reclassification of tax effects from the TCJA — 1,366 ( 1,366 ) —

Other ( 51 ) — — ( 51 )

Balance at December 31, 2020 319,506 528,580 ( 12,902 ) 835,184

1 unchanged sentence

Dividends on common stock — ( 56,056 ) — ( 56,056 )

Other ( 51 ) — — ( 51 )

Capital contributions from parent 116,009 — — 116,009

Balance at December 31, 2021 435,515 553,696 ( 11,404 ) 977,807

11 unchanged sentences

Adjustments to reconcile net income to cash provided by operations:

Depreciation and amortization 110,504 101,586 90,405

Depreciation 112,957 110,504 101,586

Regulatory amortization of gas reserves 5,589 13,897 17,779

4 unchanged sentences

Environmental remediation expense 12,389 9,938 9,691

Regulatory disallowance of pension costs — — 10,500

Asset optimization revenue sharing bill credits ( 41,102 ) ( 9,053 ) ( 16,970 )

Other 20,448 18,517 9,945

7 unchanged sentences

Decoupling mechanism 10,922 ( 5,206 ) 2,884

Cloud-based software ( 23,908 ) ( 7,407 ) ( 4,265 )

Other, net ( 12,455 ) ( 17,653 ) 3,872

18 unchanged sentences

Cash provided by financing activities 178,913 139,328 122,438

Increase (decrease) in cash, cash equivalents and restricted cash 5,093 6,832 ( 1,313 )

Increase in cash, cash equivalents and restricted cash 3,839 5,093 6,832

Cash, cash equivalents and restricted cash, beginning of period 20,832 15,739 8,907

2 unchanged sentences

Interest paid, net of capitalization $ 44,813 $ 42,395 $ 40,624

Income taxes paid 26,451 6,100 2,479

Income taxes paid, net of refunds 5,990 26,451 6,100

See Notes to Consolidated Financial Statements

6 unchanged sentences

The NGD segment is the only reportable segment for NW Holdings and NW Natural.

All other activities, water businesses, and other investments are aggregated and reported as other at their respective registrant.

All other activities, water and wastewater businesses, and other investments are aggregated and reported as other at their respective registrant.

NW Holdings and NW Natural consolidate all entities in which they have a controlling financial interest.

Investments in corporate joint ventures and partnerships that NW Holdings does not directly or indirectly control, and for which it is not the primary beneficiary, include NNG Financial's investment in Kelso-Beaver Pipeline and NWN Water's investment in Avion Water Company, Inc., which are accounted for under the equity method.

NW Natural RNG Holding Company, LLC holds an investment in Lexington Renewable Energy, LLC, which is also accounted for under the equity method.

See Note 13 for activity related to equity method investments.

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NW Natural also has natural gas storage services, which are regulated by the FERC, and to a certain extent by the OPUC and WUTC.

Additionally, certain of NW Holdings' subsidiaries own water businesses, which are regulated by the public utility commission in the state in which the water utility is located, which is currently Oregon, Washington, Idaho and Texas.

Wastewater businesses, to the extent they are regulated, are generally regulated by the public utility commissions in the state in which the wastewater utility is located, which is currently Texas and Arizona.

Accounting records and practices of the regulated businesses conform to the requirements and uniform system of accounts prescribed by these regulatory authorities in accordance with U.S.

The businesses in which customer rates are regulated by the OPUC, WUTC, IPUC, PUTC, and FERC have approved cost-based rates which are intended to allow such businesses to earn a reasonable return on invested capital.

The businesses in which customer rates are regulated by the OPUC, WUTC, IPUC, PUTC, ACC and FERC have approved cost-based rates which are intended to allow such businesses to earn a reasonable return on invested capital.

In applying regulatory accounting principles, NW Holdings and NW Natural capitalize or defer certain costs and revenues as regulatory assets and liabilities pursuant to orders of the applicable state public utility commission, which provide for the recovery of revenues or expenses from, or refunds to, utility customers in future periods, including a return or a carrying charge in certain cases.

19 unchanged sentences

Gas costs 22,355 15,477

Decoupling (3)

47,608 36,663

10 unchanged sentences

Asset optimization revenue sharing 26,368 45,124

Total current $ 112,281 $ 50,362

Total current - NW Natural $ 248,553 $ 112,281

Other (NW Holdings) 29 —

Total current - NW Holdings $ 248,582 $ 112,281

Gas costs $ 12,644 $ 250

7 unchanged sentences

16,741 13,792

Total non-current $ 657,350 $ 638,793

Total non-current - NW Natural $ 688,599 $ 657,350

Other (NW Holdings) 979 982

14 unchanged sentences

We believe all costs incurred and deferred at December 31, 2022 are prudent.

All regulatory assets and liabilities are reviewed annually for recoverability, or more often if circumstances warrant.

If we should determine that all or a portion of these regulatory assets or liabilities no longer meet the criteria for continued application of regulatory accounting, then NW Natural would be required to write-off the net unrecoverable balances in the period such determination is made.

All regulatory assets are reviewed annually for recoverability, or more often if circumstances warrant.

If we should determine that all or a portion of these regulatory assets no longer meet the criteria for continued application of regulatory accounting, then NW Natural would be required to write-off the net unrecoverable balances in the period such determination is made.

Regulatory interest income of $ 7.0 million and $ 6.1 million and regulatory interest expense of $ 2.0 million and $ 1.3 million was recognized within other income (expense), net for the years ended December 31, 2022 and 2021, respectively.

3 unchanged sentences

During 2020, our regulated utilities received approval in their respective jurisdictions to defer certain financial impacts associated with COVID-19 such as bad debt expense, financing costs to secure liquidity, lost revenues related to late fees and reconnection fees, and other COVID-19 related costs, net of offsetting direct expense reductions associated with COVID-19.

As of December 31, 2021 and 2020, we had a regulatory asset of approximately $ 8.6 million and $ 4.8 million , respectively, for incurred costs associated with COVID-19 that we believe are recoverable.

As of December 31, 2022, we believe that approximately $ 18.7 million of the financial effects related to COVID-19 are recoverable.

As part of the 2022 Oregon general rate case, NW Natural received approval from the OPUC to recover the 2020 and 2021 COVID-19 deferral beginning November 1, 2022.

Approximately $ 10.9 million will be amortized over a two -year period and NW Natural may request recovery of the remaining amount in the third year.

Included in the total balance is approximately $ 3.4 million of forgone late fee revenue that will be recognized in future periods as billed.

Beginning January 2023, NW Natural will no longer defer any COVID-19 related costs in Oregon.

NW Natural expects to recover its COVID-19 deferrals in Washington in a future proceeding.

New Accounting Standards

2 unchanged sentences

Recently Adopted Accounting Pronouncements

INCOME TAXES.

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes." The purpose of the amendment is to reduce cost and complexity related to accounting for income taxes by removing certain exceptions to the general principles and improving consistent application for other areas in Topic 740.

The amendments in this ASU were effective beginning January 1, 2021.

The amended presentation and disclosure guidance was applied retrospectively.

The adoption did not materially affect the financial statements and disclosures of NW Holdings or NW Natural.

REFERENCE RATE REFORM.

5 unchanged sentences

The amendments in ASUs 2020-04 and 2021-01 are effective for all entities as of March 12, 2020 through December 31, 2022.

In December 2022, the FASB issued ASU 2022-06, "Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848." The purpose of the amendment is to defer the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

The objective of the guidance in Topic 848 is to provide temporary relief during the transition period.

The Board included a sunset provision within Topic 848 based on expectations of when the London Interbank Offered Rate (LIBOR) would cease being published.

We do not expect the ASUs to materially affect the financial statements and disclosures of NW Holdings or NW Natural.

Recently Issued Accounting Pronouncements

In July 2021, the FASB issued ASU 2021-05, "Leases (Topic 842), Lessors - Certain Leases with Variable Lease Payments." The purpose of the amendment is to require lessors to account for certain lease transactions that contain variable lease payments as operating leases.

The amendments in this ASU are intended to eliminate the recognition of any day-one loss associated with certain sales-type and direct-financing lease transactions.

The amendments in this ASU are intended to eliminate the recognition of any day-one loss

associated with certain sales-type and direct-financing lease transactions.

The changes do not impact lessee accounting.

The new guidance is effective on January 1, 2022 and may be adopted using either a retrospective or prospective approach.

We do not expect the ASU to materially affect the financial statements and disclosures of NW Holdings or NW Natural.

The new guidance was effective on January 1, 2022 and adopted using a prospective approach.

The adoption did not materially affect the financial statements and disclosures of NW Holdings or NW Natural.

Accounting Policies

16 unchanged sentences

The provision for depreciation of NGD property, plant, and equipment is recorded under the group method on a straight-line basis with rates computed in accordance with depreciation studies approved by regulatory authorities.

The weighted-average depreciation rate for NGD assets in service was approximately 3.0 % for 2021, 3.0 % for 2020, and 2.9 % for 2019, reflecting the approximate weighted-average economic life of the property.

The weighted-average depreciation rate for NGD assets in service was approximately 3.0 % for 2022, 2021 and 2020, reflecting the approximate weighted-average economic life of the property.

This includes 2022 weighted-average depreciation rates for the following asset categories:

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For purposes of reporting cash flows, cash and cash equivalents include cash on hand plus highly liquid investment accounts with original maturity dates of three months or less.

At December 31, 2021, NW Holdings had no outstanding checks and at December 31, 2020, NW Holdings had outstanding checks of $ 4.4 million, substantially all of which is recorded at NW Natural.

At December 31, 2022, NW Holdings had outstanding checks of $ 5.8 million, substantially all of which is recorded at NW Natural, and at December 31, 2021, NW Holdings had no outstanding checks.

These balances are included in accounts payable in the NW Holdings and NW Natural balance sheets.

36 unchanged sentences

ALLOWANCE FOR TRADE RECEIVABLES.

Accounts receivable consist primarily of amounts due for natural gas sales and transportation services to NGD customers and amounts due for gas storage services.

The payment term of these receivables is generally 15 days.

The payment term of our NGD receivables is generally 15 days.

For these short-term receivables, it is not expected that forecasted economic conditions would significantly affect the loss estimates under stable economic conditions.

For extreme situations like a financial crisis, natural disaster, and the economic slowdown caused by the COVID-19 pandemic, we enhance our review and analysis.

After considering the significant exposure to COVID-19 related job losses in Oregon and Washington state, NW Holdings and NW Natural expanded our standard review procedures for our allowance for uncollectible accounts calculation, including analyzing the unemployment rate and comparing it to historic economic data during the 2007-2009 time period when the country experienced an economic recession.

We are also considering other qualitative information including recent customer interactions

related to payment plans and credit issues, statistics from our website related to credit inquiries, and bill assistance programs including the arrearage management program.

For the residential allowance calculation, we consider the funds applied or granted to customers through a variety of assistance programs including the COVID-19 arrearage management programs in Oregon and Washington.

During the third quarter of 2021, the normal collection process for residential accounts resumed.

For residential and commercial accounts, we have resumed normal collection processes and our provision is based on historical write-off trends and current information on delinquent accounts.

For industrial accounts, we continue to analyze those accounts on an account-by-account basis with specific reserves taken as necessary.

For extreme situations like a financial crisis, natural disaster, and the economic slowdown caused by the COVID-19 pandemic, we enhanced our review and analysis.

For the 2022 residential and commercial uncollectible provision, we primarily followed our standard methodology, which includes assessing historical write-off trends and current information on delinquent accounts.

Beginning October 1, 2022, new collection rules from the OPUC applied to residential and commercial customers.

This included enhanced protections for low-income customers, a return to pre-pandemic time payment arrangements terms, revised disconnection rules during the heating season, and other items.

As a result of these Oregon rule changes and our recent collection process experience, we augmented our

provision review in the third and fourth quarter for Oregon accounts in the following categories:

closed or inactive accounts aged less than 120 days, accounts on payment plans, and all other open accounts not on payment plans.

For industrial accounts, we continue to assess the provision on an account-by-account basis with specific reserves taken as necessary.

NW Natural will continue to closely monitor and evaluate our accounts receivable and the provision for uncollectible accounts.

The following table presents the activity related to the NW Holdings provision for uncollectible accounts by pool, substantially all of which is related to NW Natural's accounts receivable:

24 unchanged sentences

At December 31, 2022 and 2021, NW Holdings' materials and supplies inventories, which are comprised primarily of NW Natural's materials and supplies, totaled $ 23.5 million and $ 19.9 million, respectively.

During 2021, NW Natural entered into certain agreements to purchase renewable thermal certificates (RTCs).

During 2022 and 2021, NW Natural entered into certain agreements to purchase renewable thermal certificates (RTCs).

RTCs are initially recorded at cost and subsequently assessed for impairment based on the lower-of-cost or market model.

All RTCs purchased during 2021 were retired or used on customers behalf prior to December 31, 2021.

NW Natural's RTCs inventory totaled $ 1.7 million at December 31, 2022, and all RTCs purchased during 2021 were retired or used on customers behalf prior to December 31, 2021.

Gas reserves are payments to acquire and produce natural gas reserves.

5 unchanged sentences

Changes in the fair value of the derivatives are recognized in earnings unless specific regulatory or hedge accounting criteria are met.

Accounting for derivatives and hedges provides an exception for contracts intended for normal purchases and normal sales for

which physical delivery is probable.

Accounting for derivatives and hedges provides an exception for contracts intended for normal purchases and normal sales for which physical delivery is probable.

In addition, certain derivative contracts are approved by regulatory authorities for recovery or refund through customer rates.

Accordingly, the changes in fair value of these approved contracts are deferred as regulatory assets or liabilities pursuant to regulatory accounting principles.

Accordingly, the changes in fair value of these approved contracts are deferred as regulatory

assets or liabilities pursuant to regulatory accounting principles.

NW Natural's financial derivatives generally qualify for deferral under regulatory accounting.

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In Washington, 100 % of the differences between the PGA prices and actual gas costs are deferred.

NW Natural's financial derivatives policy sets forth the guidelines for using selected derivative products to support prudent risk management strategies within designated parameters.

NW Holdings and NW Natural have financial derivative policies that set forth guidelines for using selected derivative products to support prudent risk management strategies within designated parameters.

NW Natural's objective for using derivatives is to decrease the volatility of gas prices and cash flows without speculative risk.

The use of derivatives is permitted only after the risk exposures have been identified, are determined not to exceed acceptable tolerance levels, and are determined necessary to support normal business activities.

The use of derivatives is permitted only after the risk exposures have been identified, are determined to exceed acceptable tolerance levels, and are determined necessary to support normal business activities.

NW Natural does not enter into derivative instruments for trading purposes.

All derivatives for NW Holdings are currently held at NW Natural.

All commodity and foreign exchange derivatives are currently held at NW Natural, and interest rate swaps are held at NW Holdings and NWN Water.

In accordance with fair value accounting, we use the following fair value hierarchy for determining inputs for our debt, pension plan assets, and derivative fair value measurements:

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Adjustments are recorded during the measurement period to finalize the allocation of the purchase price.

The carrying value of goodwill is reviewed annually during the fourth quarter using balances as of October 1, or whenever events or changes in circumstance indicate that such carrying values may not be recoverable.

The carrying value of goodwill is reviewed annually during the fourth quarter, or whenever events or changes in circumstance indicate that such carrying values may not be recoverable.

The goodwill assessment policy begins with a qualitative analysis in which events and circumstances are evaluated, including macroeconomic conditions, industry and market conditions, regulatory environments, and overall financial performance of the reporting unit.

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Acquisition-related costs are expensed as incurred.

When NW Natural acquires a business, it assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual

terms, economic circumstances and pertinent conditions as of the acquisition date.

When there is substantial judgment or uncertainty around the fair value of acquired assets, we may engage a third party expert to assist in determining the fair values of certain assets or liabilities.

When NW Natural acquires a business, it assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as of the acquisition date.

When there is substantial judgment or

uncertainty around the fair value of acquired assets, we may engage a third party expert to assist in determining the fair values of certain assets or liabilities.

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.

3 unchanged sentences

Regulatory tax assets and liabilities are recorded on these deferred tax assets and liabilities to the extent it is believed they will be recoverable from or refunded to customers in future rates.

Deferred investment tax credits on NGD plant additions, which reduce income taxes payable, are deferred for financial statement purposes and amortized over the life of the related plant.

Investment tax credits associated with rate regulated plant additions are deferred for financial statement purposes and amortized over the estimated useful lives of the related plant.

NW Holdings files consolidated or combined income tax returns that include NW Natural.

13 unchanged sentences

Unconsolidated Affiliates

NW Holdings and NWN Water have equity interests in businesses which we account for under the equity method as we do not exercise control of the major operating and financial policies.

The carrying value of these investments as of December 31, 2021 was $ 14.5 million.

NW Holdings, NW Natural and NWN Water have equity interests in businesses which we account for under the equity method as we do not exercise control of the major operating and financial policies.

The carrying value of these investments was $ 23.4 million and $ 14.5 million as of December 31, 2022 and 2021, respectively.

The business transactions with our equity method investments are not significant.

1 unchanged sentence

See Note 13 .

Cloud Computing Arrangements

Implementation costs associated with its cloud computing arrangements are capitalized consistent with costs capitalized for internal-use software.

Capitalized implementation costs are included in other assets in the consolidated balance sheets.

The implementation costs are amortized over the term of the related hosting agreement, including renewal periods that are reasonably certain to be exercised.

Amortization expense of implementation costs are recorded as operations and maintenance expenses in the consolidated statements of comprehensive income.

The implementation costs are included within operating activities in the consolidated statements of cash flows.

Subsequent Events

7 unchanged sentences

Net income from continuing operations $ 86,303 $ 78,666 $ 70,273

Income (loss) from discontinued operations, net of tax — 6,508 ( 3,576 )

Income from discontinued operations, net of tax — — 6,508

Net income $ 86,303 $ 78,666 $ 76,781

5 unchanged sentences

Diluted 2.54 2.56 2.30

Earnings (loss) from discontinued operations per share of common stock:

Earnings from discontinued operations per share of common stock:

Basic $ — $ — $ 0.21

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Earnings from the Mist facility also include revenue, net of amounts shared with NGD customers, from management of NGD assets at Mist and upstream pipeline capacity when not needed to serve NGD customers.

Under the Oregon sharing mechanism, NW Natural retains 80 % of the pre-tax income from these services when the costs of the capacity were not included in NGD rates, or 10 % of

the pre-tax income when the costs have been included in these rates.

Under the Oregon sharing mechanism, NW Natural retains 80 % of the pre-tax income from these services when the costs of the capacity were not included in NGD rates, or 10 % of the pre-tax income when the costs have been included in these rates.

The remaining 20 % and 90 %, respectively, are recorded to a deferred regulatory account for crediting back to NGD customers.

NW Holdings' activities in Other include all remaining activities not associated with NW Natural, specifically NWN Water, which consolidates the water and wastewater utility operations and is pursuing other investments in the water sector through itself and wholly-owned subsidiaries;

NW Holdings' activities in Other include all remaining activities not associated with NW Natural, specifically NWN Water, which consolidates the water and wastewater utility operations and is pursuing other investments in the water and wastewater sector through itself and wholly-owned subsidiaries;

NWN Water's equity investment in Avion Water Company, Inc.;

NWN Gas Storage, a wholly-owned subsidiary of NWN Energy;

NWN Energy's equity investment in Trail West Holdings, LLC (TWH) through August 6, 2020;

and other pipeline assets in NNG Financial.

other pipeline assets in NNG Financial;

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

For more information on the sale of TWH, see Note 13.

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Operating revenues $ 989,752 $ 24,587 $ 1,014,339 $ 23,014 $ 1,037,353

Depreciation and amortization 109,475 1,029 110,504 3,030 113,534

Depreciation 111,871 1,086 112,957 3,750 116,707

Income (loss) from operations 152,839 16,535 169,374 ( 1,897 ) 167,477

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Operating revenues $ 816,887 $ 26,170 $ 843,057 $ 17,343 $ 860,400

Depreciation and amortization 100,591 995 101,586 2,097 103,683

Depreciation 109,475 1,029 110,504 3,030 113,534

Income (loss) from operations 147,902 17,331 165,233 ( 2,116 ) 163,117

3 unchanged sentences

Operating revenues $ 741,072 $ 17,676 $ 758,748 $ 14,931 $ 773,679

Depreciation and amortization 89,415 990 90,405 1,091 91,496

Depreciation 100,591 995 101,586 2,097 103,683

Income (loss) from operations 137,724 9,916 147,640 711 148,351

2 unchanged sentences

Total assets at December 31, 2020 3,549,868 49,468 3,599,336 157,043 3,756,379

3,273,835 47,652 3,321,487 91,833 3,413,320

(1) Total assets for NW Holdings exclude assets related to discontinued operations of $ 15.1 million as of December 31, 2019.

Natural Gas Distribution Margin

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Any shares of common stock offered under the ATM equity program are registered on NW Holdings’ universal shelf registration statement filed with the SEC.

As of December 31, 2021, NW Holdings had issued and sold 375,720 shares of common stock pursuant to the ATM equity program resulting in cash proceeds of $ 17.5 million, net of fees and commissions paid to agents of $ 0.4 million.

During the year ended December 31, 2022, NW Holdings issued and sold 1,381,728 shares of common stock pursuant to the ATM equity program resulting in cash proceeds of $ 69.7 million, net of fees and commissions paid to agents of $ 1.4 million.

As of December 31, 2022, NW Holdings had $ 111.1 million of equity available for issuance under the program.

The ATM equity program was initiated to raise funds for general corporate purposes, including equity contributions to NW Holdings’ subsidiaries, NW Natural and NW Natural Water.

Contributions to NW Natural and NW Natural Water will be used for general corporate purposes.

On April 1, 2022, NW Holdings issued and sold 2,875,000 shares of its common stock pursuant to a registration statement on Form S-3 and related prospectus settlement.

NW Holdings received net offering proceeds, after deducting the underwriter's discounts and commissions and estimated expenses payable by NW Holdings, of approximately $ 138.6 million.

The proceeds are to be used for general corporate purposes, including repayment of its short-term indebtedness and/or making equity contributions to NW Holdings' subsidiaries, NW Natural, NW Natural Water and NW Natural Renewables.

Contributions to NW Natural, NW Natural Water and NW Natural Renewables are to be used for general corporate purposes.

Of the contributions received by NW Natural, $ 130.0 million was used to repay its short-term indebtedness.

Stock Repurchase Program

NW Holdings has a share repurchase program under which it may purchase its common shares on the open market or through privately negotiated transactions.

NW Holdings currently has Board authorization through May 2022 to repurchase up to an aggregate of the greater of 2.8 million shares or $ 100 million.

NW Holdings currently has Board authorization to repurchase up to an aggregate of the greater of 2.8 million shares or $ 100 million.

No shares of common stock were repurchased pursuant to this program during the year ended December 31, 2022.

5 unchanged sentences

Stock-based compensation 46

Equity issuance 1,438

Sales to shareholders under DRPP 68

2 unchanged sentences

Stock-based compensation 49

Equity issuance 376

Sales to shareholders under DRPP 67

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Total operating revenues $ 816,887 $ 26,170 $ 843,057 $ 17,343 $ 860,400

Year ended December 31, 2020

In thousands NGD Other

(NW Natural) NW Natural Other

(NW Holdings) NW Holdings

Natural gas sales $ 710,422 $ — $ 710,422 $ — $ 710,422

Gas storage revenue, net — 9,759 9,759 — 9,759

Asset management revenue, net — 2,532 2,532 — 2,532

Appliance retail center revenue — 5,385 5,385 — 5,385

Other revenue 1,337 — 1,337 14,931 16,268

Revenue from contracts with customers 711,759 17,676 729,435 14,931 744,366

Alternative revenue 10,870 — 10,870 — 10,870

Leasing revenue 18,443 — 18,443 — 18,443

Total operating revenues $ 741,072 $ 17,676 $ 758,748 $ 14,931 $ 773,679

NW Natural's revenue represents substantially all of NW Holdings' revenue and is recognized for both registrants when the obligation to customers is satisfied and in the amount expected to be received in exchange for transferring goods or providing services.

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Asset Management Revenue

Revenues include the optimization of third-party storage assets and pipeline capacity and are provided net of the profit sharing amount refunded to NGD customers.

Revenues include the optimization of storage assets and pipeline capacity and are provided net of the profit sharing amount refunded to NGD customers.

Certain asset management revenues received are recognized over time using a straight-line approach over the term of each contract, and the amount of consideration received and recognized as revenue is dependent on a variable pricing model.

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Total lease revenue $ 17,193 $ 17,551 $ 18,443

Additionally, lease revenue of $ 0.5 million was recognized for each of the years ended December 31, 2021 and 2020 related to operating leases associated with non-utility property rentals.

Additionally, lease revenue of $ 0.6 million, $ 0.5 million and $ 0.5 million was recognized for each of the years ended December 31, 2022, 2021, and 2020, respectively, related to operating leases associated with non-utility property rentals.

Lease revenue related to these leases was presented in other income (expense), net on the consolidated statements of comprehensive income as it is non-operating income.

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Our primary lease is for NW Natural's headquarters and operations center.

Our leases have remaining lease terms of one year to 18 years.

Many of our lease agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised.

Our leases have remaining lease terms of nine months to 17 years.

Many of our lease agreements include options to

extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised.

Short-term leases with a term of 12 months or less are not recorded on the balance sheet.

11 unchanged sentences

Short-term lease expense 1,220 — 1,220

Year ended December 31, 2020

In thousands NW Natural Other

(NW Holdings) NW Holdings

Operating lease expense $ 4,381 $ 125 $ 4,506

Short-term lease expense 1,010 — 1,010

Supplemental balance sheet information related to operating leases as of December 31, 2022 is as follows:

20 unchanged sentences

OPUC issued an order allowing us to align our expense recognition with cash payments for ratemaking purposes.

We recorded the difference between the minimum lease payments and the aggregate of the imputed interest on the finance lease obligation and amortization of the right-of-use asset as a regulatory asset on our balance sheet.

We recorded the difference between the minimum lease payments and the aggregate of the imputed interest on the finance lease

obligation and amortization of the right-of-use asset as a regulatory asset on our balance sheet.

The balance of the regulatory asset was $ 6.9 million and $ 5.7 million as of December 31, 2022 and 2021, respectively.

13 unchanged sentences

Long-term lease obligations $ 78,345 $ 620 $ 78,965

As of December 31, 2021, finance lease liabilities with maturities of less than one year were $ 0.3 million at NW Natural.

As of December 31, 2022, there were no finance lease liabilities at NW Natural.

Cash Flow Information

18 unchanged sentences

Finance leases 314 — 314

Year ended December 31, 2020

In thousands NW Natural Other

(NW Holdings) NW Holdings

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from operating leases $ 4,466 $ 131 $ 4,597

Finance cash flows from finance leases 835 — 835

Right of use assets obtained in exchange for lease obligations

Operating leases $ 78,539 $ 51 $ 78,590

Finance leases 1,386 — 1,386

Finance Leases

NW Natural also leases building storage spaces for use as a gas meter room in order to provide natural gas to multifamily or mixed use developments.

3 unchanged sentences

Stock-based compensation plans are designed to promote stock ownership in NW Holdings by employees and officers of NW Holdings and its affiliates.

These compensation plans include a Long Term Incentive Plan (LTIP), an ESPP, and a terminated Restated Stock Option Plan (SOP).

These compensation plans include a Long Term Incentive Plan (LTIP) and an ESPP.

Long Term Incentive Plan

22 unchanged sentences

(2) Amount represents the expense recognized in the third year of the vesting period noted above.

For the 2019-2021 grant, mutual understanding of the award's key terms was established in the third year of the vesting period, triggering full expense recognition in 2021.

For the 2019-2021 and 2020-2022 grants, mutual understanding of the award's key terms was established in the third year of the vesting period, triggering full expense recognition in 2021 and 2022, respectively.

(3) This represents the estimated number of shares to be awarded as of December 31, 2022 as certain performance share measures have been achieved.

7 unchanged sentences

Total 31,160 62,320 $ 888

Performance share awards are based on the achievement of a three-year ROIC threshold that must be met and a cumulative EPS factor, which can be modified by a TSR factor relative to the performance of the Russell 2500 Utilities Index (2019-2021 and 2020-2022 performance share awards) or a specified peer group (2021-2023 performance share awards) over the three-year performance period.

Performance share awards are based on the achievement of a three -year ROIC threshold that must be met and a cumulative EPS factor, which can be modified by a TSR factor relative to the performance of the Russell 2500 Utilities Index (2020-2022 performance share awards) or a specified peer group (2021-2023 and 2022-2024 performance share awards) over the three-year performance period.

The performance period allows for one of the performance factors to remain variable until the first quarter of the third year of the award period.

5 unchanged sentences

The weighted-average grant date fair value of non-vested shares associated with the 2020-2022 awards was $ 38.63 per share at December 31, 2022.

The weighted-average grant date fair value of shares vested during the year was $ 44.64 per share and there were no performance shares granted during the year and no unrecognized compensation expense for accounting purposes as of December 31, 2021.

weighted-average grant date fair value of shares vested during the year was $ 38.63 per share and there were no performance shares granted during the year and no unrecognized compensation expense for accounting purposes as of December 31, 2022.

Restricted Stock Units

22 unchanged sentences

Nonvested, December 31, 2022 99,848 $ 50.44

Restated Stock Option Plan

The Restated SOP was terminated with respect to new grants in 2012;

however, options granted before the Restated SOP was terminated remained outstanding until the earlier of their expiration, forfeiture, or exercise.

Options were exercisable for shares of NW Holdings common stock.

As of December 31, 2021, there were no options exercisable or outstanding.

Information regarding the Restated SOP activity is summarized as follows:

Shares Weighted -

Price Per Share Intrinsic

(In millions)

Balance outstanding and exercisable, December 31, 2018 55,938 $ 44.96 $ 0.9

Exercised ( 45,000 ) 44.79 1.0

Forfeited — — n/a

Balance outstanding and exercisable, December 31, 2019 10,938 45.67 0.3

Exercised ( 1,500 ) 45.24 —

Expired — — n/a

Balance outstanding and exercisable, December 31, 2020 9,438 45.74 —

Exercised ( 9,438 ) 45.74 —

Expired — — n/a

Balance outstanding and exercisable, December 31, 2021 — $ — $ —

Employee Stock Purchase Plan

3 unchanged sentences

Stock-based compensation expense is recognized as operations and maintenance expense or is capitalized as part of construction overhead at the entity at which the award recipient is employed.

The following table summarizes the NW Holdings' financial statement impact, substantially all of which was recorded at NW Natural, of stock-based compensation under the LTIP, Restated SOP and ESPP:

The following table summarizes the NW Holdings' financial statement impact, substantially all of which was recorded at NW Natural, of stock-based compensation under the LTIP and ESPP:

In thousands 2022 2021 2020

1 unchanged sentence

Income tax benefit ( 762 ) ( 866 ) ( 933 )

Net stock-based compensation effect on net income (loss) 2,406 2,592 1,597

Net stock-based compensation effect on net income 2,115 2,406 2,592

Amounts capitalized for stock-based compensation $ 351 $ 344 $ 841

6 unchanged sentences

See “ Credit Agreements ” below.

In June 2021, NW Natural entered into a $ 100.0 million 364-Day Term Loan Credit Agreement (Term Loan) and borrowed the full amount.

All principal and interest under the Term Loan was repaid in December 2021.

At December 31, 2021 and 2020, NW Natural's short-term debt outstanding of $ 245.5 million and $ 231.5 million, respectively, consisted of commercial paper borrowings.

At December 31, 2021 and 2020, NW Holdings' short-term debt outstanding of $ 389.5 million and $ 304.5 million, respectively, consisted of the commercial paper outstanding at NW Natural and $ 144.0 million and $ 73.0 million, respectively, of balances outstanding under the credit agreement at NW Holdings.

The weighted average interest rate of commercial paper at NW Natural at December 31, 2021 and 2020 was 0.3 % and 0.4 %, respectively.

weighted average interest rate on the credit agreement at NW Holdings at December 31, 2021 and 2020 was 1.1 % and 1.2 %, respectively.

At December 31, 2022 and 2021, NW Natural's short-term debt consisted of the following:

December 31, 2022 December 31, 2021

In millions Balance Outstanding Weighted Average Interest Rate (1)

Balance Outstanding Weighted Average Interest Rate (1)

Commercial paper $ 170.2 4.6 % $ 245.5 0.3 %

Other (NW Holdings):

Credit agreement 88.0 5.3 % 144.0 1.1 %

NW Holdings $ 258.2 $ 389.5

(1) Weighted average interest rate on outstanding short-term debt

The carrying cost of commercial paper approximates fair value using Level 2 inputs.

4 unchanged sentences

The maturity date of the agreement is November 3, 2026, with an available extension of commitments for two additional one -year periods, subject to lender approval.

Interest charges on the NW Holdings credit agreement were indexed to the London Interbank Offered Rate (LIBOR) through January 31, 2023.

The agreement was amended to replace LIBOR with the secured overnight financing rate (SOFR) beginning February 2023.

The SOFR is subject to a 10 basis point spread adjustment.

The NW Holdings credit agreement permits the issuance of letters of credit in an aggregate amount of up to $ 40.0 million.

12 unchanged sentences

The maturity date of the agreement is November 3, 2026 with an available extension of commitments for two additional one -year periods, subject to lender approval.

The credit agreement permits the issuance of letters of credit in an aggregate amount of up to $ 60.0 million.

The credit agreement permits the issuance of letters of credit in an

aggregate amount of up to $ 60.0 million.

The principal amount of borrowings under the credit agreement is due and payable on the maturity date.

There were no outstanding balances under NW Natural's credit agreement and no letters of credit issued or outstanding at December 31, 2021 and 2020.

NW Natural's credit agreement require NW Natural to maintain a consolidated indebtedness to total capitalization ratio of 70 % or less.

Interest charges on the NW Natural credit agreement were indexed to the LIBOR through January 31, 2023.

The agreement was amended to replace LIBOR with the SOFR beginning February 2023.

The SOFR is subject to a 10 basis point spread adjustment.

NW Natural's credit agreement requires NW Natural to maintain a consolidated indebtedness to total capitalization ratio of 70 % or less.

Failure to comply with this covenant would entitle the lenders to terminate their lending commitments and accelerate the maturity of all amounts outstanding.

3 unchanged sentences

Rather, interest rates on any loans outstanding under the credit agreement are tied to debt ratings and therefore, a change in the debt rating would increase or decrease the cost of any loans under the credit agreement when ratings are changed.

There were no outstanding balances under NW Natural's credit agreement and no letters of credit issued or outstanding at December 31, 2022 and 2021.

In February 2023, NW Natural issued a $ 14 million letter of credit through its existing credit agreement.

There were no other letters of credit outstanding under the credit agreement.

Long-Term Debt

At December 31, 2021 and 2020, NW Holdings had long-term debt outstanding of $ 1,044.9 million and $ 955.4 million, respectively;

which included $ 8.3 million and $ 7.5 million of unamortized debt issuance costs, respectively.

NW Holdings' long-term debt is primarily comprised of debt held at its wholly-owned subsidiaries NW Natural (shown below) and NWN Water.

At December 31, 2022 and 2021, NW Holdings long-term debt consisted of the following:

December 31, 2022 December 31, 2021

In millions Balance Outstanding Weighted Average Interest Rate (1)

Balance Outstanding Weighted Average Interest Rate (1)

NW Natural first mortgage bonds $ 1,134.7 4.5 % $ 994.7 4.4 %

NW Holdings credit agreement 100.0 4.2 % — — %

NWN Water credit agreement 50.0 4.2 % — — %

NWN Water term loan 55.0 2.5 % 55.0 0.8 %

Other long-term debt 6.2 3.5

Long-term debt, gross $ 1,345.9 $ 1,053.2

unamortized debt issuance costs 9.0 8.3

current maturities 90.7 0.3

Total long-term debt $ 1,246.2 $ 1,044.6

(1) Weighted average interest rate for the years ended December 31, 2022 and 2021.

Long-term debt at NWN Water is primarily comprised of a five -year term loan agreement for $ 55.0 million, due in 2026.

NWN Water entered into this agreement in June 2021 and the loan carried an interest rate of 0.90 % at December 31, 2021, which is based upon the one-month LIBOR rate.

NWN Water entered into this agreement in June 2021 and the interest rate is based upon the one -month SOFR rate.

The loan is guaranteed by NW Holdings and requires NW Holdings to maintain a consolidated indebtedness to total capitalization ratio of 70 % or less.

Failure to comply with this covenant 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 December 31, 2021, with a consolidated indebtedness to total capitalization ratio of 60.5 %.

In June 2019, NW Natural Water, a wholly-owned subsidiary of NW Holdings, entered into a two-year term loan agreement for $ 35.0 million.

The loan was repaid in June 2021 upon its maturity date.

NW Natural's issuance of First Mortgage Bonds, which includes NW Natural's medium-term notes, under the Mortgage and Deed of Trust (Mortgage) is limited by eligible property, adjusted net earnings, and other provisions of the Mortgage.

NW Holdings was in compliance with this covenant at December 31, 2022 and 2021, with a consolidated indebtedness to total capitalization ratio of 57.6 % and 60.5 %, respectively.

In December 2022, NW Holdings entered into a swap to fix the interest rate on this debt beginning in January 2023 through the loan's maturity.

See "Interest Rate Swap Agreements" below for more detail.

In September 2022, NW Holdings entered into an 18 -month credit agreement for $ 100.0 million and borrowed the full amount.

The interest rate is based on the SOFR.

The loan is due and payable on March 15, 2024.

The credit agreement prohibits NW Holdings 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.

Failure to comply with this financial covenant would entitle the lenders to accelerate the maturity of the amounts outstanding under the credit agreement.

NW Holdings was in compliance with this financial covenant as of December 31, 2022.

In December 2022, NW Holdings entered into a swap to fix the interest rate on this debt beginning in January 2023 through the loan's maturity.

See "Interest Rate Swap Agreements" below for more detail.

In September 2022, NWN Water entered into an 18 -month credit agreement for $ 50.0 million and borrowed the full amount.

The interest rate is based on the SOFR.

The loan is due and payable on March 15, 2024.

The credit agreement prohibits NWN Water and NW Holdings 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.

Failure to comply with this financial covenant would entitle the lenders to accelerate the maturity of the amounts outstanding under the credit agreement.

NWN Water and NW Holdings were in compliance with this financial covenant as of December 31, 2022.

Interest Rate Swap Agreements

NW Holdings and NWN Water entered into interest rate swap agreements with major financial institutions that effectively convert variable-rate debt to a fixed rate.

Interest payments made between the effective date and expiration date are hedged by the swap agreements.

The notional amount, effective date, expiration date and rate of the swap agreements are shown in the table below:

In millions Notional Amount Effective Date Expiration Date Fixed Rate

NW Holdings $ 100.0 1/17/2023 3/15/2024 4.7 %

NWN Water $ 55.0 1/19/2023 6/10/2026 3.8 %

NW Natural's issuance of First Mortgage Bonds (FMBs), which includes NW Natural's medium-term notes, under the Mortgage and Deed of Trust (Mortgage) is limited by eligible property, adjusted net earnings, and other provisions of the Mortgage.

The Mortgage constitutes a first mortgage lien on certain gas properties owned from time to time by NW Natural, including substantially all of NW Natural's NGD property.

In July 2022, NW Natural entered into a Bond Purchase Agreement between NW Natural and the institutional investors named as purchasers therein (the Bond Purchase Agreement).

The Bond Purchase Agreement provides for the issuance of $ 140.0 million aggregate principal amount of NW Natural's FMBs due in 2052 (the Bonds).

The Bonds were issued on September 30, 2022.

The Bonds bear interest at the rate of 4.78 % per annum, payable semi-annually on March 30 and September 30 of each year, commencing March 30, 2023, and will mature on September 30, 2052.

The Bonds are subject to redemption prior to maturity at the option of NW Natural, in whole or in part, (i) at any time prior to March 30, 2052, at a redemption price equal to 100 % of the principal amount thereof plus a “make-whole” premium and accrued and unpaid interest thereon to the date of redemption, and (ii) at any time on and after March 30, 2052, at 100 % of the principal amount thereof plus accrued and unpaid interest thereon to the date of redemption.

Maturities and Outstanding Long-Term Debt

1 unchanged sentence

In thousands Long-term debt maturities

2023 $ 90,000

Thereafter 895,000

4 unchanged sentences

3.542 % Series due 2023

3.176 % Series due 2021

50,000 50,000

5.620 % Series due 2023

78 unchanged sentences

Interest cost 14,593 13,447 724 684

Net actuarial (gain) loss ( 18,587 ) 52,777 ( 688 ) 145

Net actuarial gain ( 122,168 ) ( 18,587 ) ( 6,234 ) ( 688 )

Benefits paid ( 27,563 ) ( 25,371 ) ( 2,026 ) ( 2,050 )

8 unchanged sentences

At December 31, 2022, the net liability (benefit obligations less market value of plan assets) for the Pension Plan decreased $ 3.3 million compared to 2021.

The decrease in the net pension liability is primarily due to the $ 25.3 million increase in plan assets and the $ 21.3 million decrease to the pension benefit obligation.

The decrease in the net pension liability is primarily due to the $ 118.9 million decrease in plan assets and the $ 122.3 million decrease to the pension benefit obligation.

The liability for non-qualified plans decreased $ 6.9 million, and the liability for other postretirement benefits decreased $ 7.3 million in 2022.

7 unchanged sentences

Amortization of:

Prior service (cost) credit — — ( 7 ) 468 468 468 — — —

Prior service credit — — — 333 468 468 — — —

Actuarial loss ( 11,531 ) ( 21,250 ) ( 18,627 ) ( 426 ) ( 645 ) ( 607 ) ( 1,081 ) ( 1,225 ) ( 923 )

4 unchanged sentences

In thousands 2022 2021 2022 2021 2022 2021

Prior service cost (credit) $ — $ — $ ( 333 ) $ ( 801 ) $ — $ —

Net actuarial loss 112,182 164,446 5,834 7,167 15,399 17,434

Prior service credit $ — $ — $ — $ ( 333 ) $ — $ —

Net actuarial loss (gain) 102,240 112,182 ( 826 ) 5,834 8,717 15,399

Total $ 102,240 $ 112,182 $ ( 826 ) $ 5,501 $ 8,717 $ 15,399

7 unchanged sentences

Total reclassifications before tax 6,787 2,037

Tax (benefit) expense ( 539 ) 781

Tax benefit ( 1,797 ) ( 539 )

Total reclassifications for the period 4,990 1,498

Ending balance $ ( 6,414 ) $ ( 11,404 )

In 2022, NW Natural will amortize an estimated $ 11.8 million from regulatory assets to net periodic benefit costs, consisting of $ 12.1 million of actuarial losses offset by $ 0.3 million of prior service credits.

In 2023, NW Natural will not amortize any estimated costs from regulatory assets to net periodic benefit costs.

The assumed discount rates for NW Natural's Pension Plan and other postretirement benefit plans were determined independently based on the FTSE Above Median Curve (discount rate curve), which uses high quality corporate bonds rated AA- or higher by S&P or Aa3 or higher by Moody’s.

4 unchanged sentences

The policies set forth the guidelines and objectives governing the investment of plan assets.

Plan assets are invested for total return

with appropriate consideration for liquidity, portfolio risk, and return expectations.

Plan assets are invested for total return with appropriate consideration for liquidity, portfolio risk, and return expectations.

All investments are expected to satisfy the prudent investments rule under the Employee Retirement Income Security Act of 1974.

2 unchanged sentences

Investment re-balancing takes place periodically as needed, or when significant cash flows occur, in order to maintain the allocation of assets within the stated target ranges.

The retirement trust fund is not currently invested in NW Holdings or NW Natural securities.

The retirement trust fund for the Pension Plan is not currently invested in NW Holdings or NW Natural securities.

The following table presents the Pension Plan asset target allocation at December 31, 2022:

26 unchanged sentences

Expected return on plan assets ( 25,698 ) ( 24,232 ) ( 21,865 ) — — —

Amortization of prior service cost (credit) — — 7 ( 468 ) ( 468 ) ( 468 )

Amortization of prior service credit — — — ( 333 ) ( 468 ) ( 468 )

Amortization of net actuarial loss 12,612 22,475 19,550 426 645 607

2 unchanged sentences

Net periodic benefit cost charged to expense 4,819 15,657 17,662 934 1,006 1,204

Regulatory pension disallowance — — 10,500 — — —

Amortization of regulatory balancing account 7,131 7,131 7,131 — — —

8 unchanged sentences

Weighted-average discount rate 2.71 % 2.40 % 3.18 % 2.72 % 2.34 % 3.11 %

Rate of increase in compensation 3.50 % 3.50 % 3.25 - 3.50 %

Rate of increase in compensation 3.50 % 3.50 % 3.50 % n/a n/a n/a

Expected long-term rate of return 7.00 % 7.25 % 7.25 % n/a n/a n/a

5 unchanged sentences

Expected long-term rate of return 7.50 % 7.00 % 7.25 % n/a n/a n/a

(1) Rate assumption was 6.50 % in 2020 and 3.50 % thereafter.

The 2020 compensation increase assumption was a result of the 2019 execution of a collective bargaining agreement with unionized members of NW Natural effective December 1, 2019.

(1) Rate assumption ranges from 4.5 % to 5.0 % in 2023, 4.0 % to 6.0 % in 2024 and 4.0 % thereafter.

The assumed annual increase in health care cost trend rates used in measuring other postretirement benefits as of December 31, 2022 was 7.00 % .

4 unchanged sentences

Mortality assumptions are reviewed annually and are updated for material changes as necessary.

In 2021, mortality rate assumptions were updated from Pri-2012 mortality tables using scale MP-2020 to Pri-2012 mortality tables using scale MP-2021, which partially offset increases of the projected benefit obligation.

In 2022, mortality rate assumptions remained consistent with 2021, using Pri-2012 mortality tables using scale MP-2021.

The following table provides information regarding employer contributions and benefit payments for NW Natural's Pension Plan, non-qualified pension plans, and other postretirement benefit plans for the years ended December 31, and estimated future contributions and payments:

18 unchanged sentences

The Pension Plan was underfunded by $ 101.3 million at December 31, 2022.

NW Natural made cash contributions totaling $ 9.6 million to its Pension Plan for 2021.

NW Natural made no cash contributions to its Pension Plan for 2022.

The American Rescue Plan, which was signed into law on March 11, 2021, includes a provision for pension relief that extends the amortization period for required contributions from 7 to 15 years and provides for the stabilization of interest rates used to calculate future required contributions.

3 unchanged sentences

That plan's employer identification number is 94-6076144.

Effective December 22, 2013,

NW Natural withdrew from the plan, which was a noncash transaction.

Effective December 22, 2013, NW Natural withdrew from the plan, which was a noncash transaction.

Vested participants will receive all benefits accrued through the date of withdrawal.

29 unchanged sentences

OPPORTUNISTIC.

These are non-published NAV assets consisting of commingled trusts where the investments can be readily disposed of at unit price, and a hedge fund of funds where the valuation is not published.

This hedge fund of funds is winding down.

Based on recent dispositions, NW Natural believes the remaining investment is fairly valued.

The hedge fund of funds is valued at the weighted average value of investments in various hedge funds, which in turn are valued at the closing price of the underlying securities.

This asset class includes investments in emerging market debt, leveraged loans, REITs, high yield bonds, a commodities fund, and a hedge fund of funds .

These are non-published NAV assets.

The non-published NAV assets consist of commingled trusts where NAV is not published but the investment can be readily disposed of at NAV or market value.

The underlying investments in this asset class include real estate investment trust equities, high yield bonds, floating rate debt, emerging market debt and a commodity index pool.

CASH AND CASH EQUIVALENTS.

38 unchanged sentences

Differences required to be flowed-through by regulatory commissions ( 4,748 ) ( 4,655 ) ( 3,960 ) ( 4,746 ) ( 4,738 ) ( 3,960 )

Regulatory settlement — — ( 1,129 ) — — ( 1,129 )

Other, net ( 502 ) ( 176 ) ( 532 ) ( 468 ) ( 75 ) ( 578 )

1 unchanged sentence

Effective tax rate 25.2 % 25.8 % 23.1 % 25.3 % 25.9 % 23.0 %

The NW Holdings and NW Natural effective income tax rates for 2021 compared to 2020 changed primarily due to Oregon Corporate Activity Tax (CAT), the majority of which is incurred because of Oregon regulated operations and for which rate recovery began on November 1, 2020.

The NW Holdings and NW Natural effective income tax rates for 2020 compared to 2019 changed primarily as a result of higher pre-tax income, Oregon CAT effective January 1, 2020, and amortization of excess deferred income tax benefits as ordered by regulatory commissions.

The NW Holdings and NW Natural effective income tax rates for 2022 compared to 2021 changed primarily due to lower income tax amortization in 2022 of the 2020 Oregon Corporate Activity Tax (CAT), which was subject to regulatory deferral when it became effective on January 1, 2020 and then amortized in income tax expense as recovery began in late 2020, 2021, and 2022.

The NW Holdings and NW Natural effective income tax rates for 2021 compared to 2020 changed primarily due to Oregon CAT, the majority of which is incurred because of Oregon regulated operations and for which rate recovery began on November 1, 2020.

The provision for current and deferred income taxes consists of the following at December 31:

24 unchanged sentences

Net operating losses and credits carried forward 101 126 44 44

Other — 1,407 — 1,181

Total deferred income tax assets $ 71,624 $ 75,433 $ 69,164 $ 71,602

4 unchanged sentences

At December 31, 2022 and 2021, regulatory income tax assets of $ 2.9 million and $ 2.4 million, respectively, were recorded by NW Natural, representing future recovery of deferred tax liabilities resulting from the equity portion of AFUDC.

At December 31, 2021 and 2020, regulatory income tax assets of $ 0.4 million and $ 1.7 million, respectively, were recorded by NW Natural, representing future recovery of Oregon CAT that was deferred between January 1, 2020 and October 31, 2020.

At December 31, 2021, a regulatory income tax asset of $ 0.4 million was recorded by NW Natural, representing future recovery of Oregon CAT that was deferred between January 1, 2020 and October 31,2020.

In October 2020, the OPUC issued an order providing for recovery of deferred Oregon CAT as well as CAT incurred prospectively beginning November 1, 2020.

At December 31, 2021 and 2020, deferred tax assets of $ 50.2 million and $ 52.4 million, respectively, were recorded by NW Natural representing the future income tax benefit associated with the excess deferred income tax regulatory liability recorded as a result of the lower federal corporate income tax rate provided for by the Tax Cuts and Jobs Act (TCJA).

This asset was fully recovered as of December 31, 2022.

At December 31, 2022 and 2021, deferred tax assets of $ 48.0 million and $ 50.2 million, respectively, were recorded by NW Natural representing the future income tax benefit associated with the excess deferred income tax regulatory liability recorded as a result of the lower federal corporate income tax rate provided for by the TCJA.

At December 31, 2022 and 2021, regulatory liability balances representing the benefit of the change in deferred taxes as a result of the TCJA of $ 181.4 million and $ 189.6 million, respectively, were recorded by NW Natural.

2 unchanged sentences

The Company estimates it has net operating loss (NOL) carryforwards of $ 0.1 million for federal taxes and $ 0.1 million for state taxes at December 31, 2022.

We anticipate fully utilizing these NOL carryforward balances before they begin to expire in 2033 for federal and 2028 for state.

California alternative minimum tax (AMT) credits and Idaho investment tax credits (ITC) of $ 0.1 million are also available.

The federal NOLs do not expire and we anticipate fully utilizing the state NOL carryforward

balances before they begin to expire in 2040.

California alternative minimum tax (AMT) credits of $ 56 thousand are also available.

The AMT credits do not expire.

The ITC credits begin to expire in 2033.

Uncertain tax positions are accounted for in accordance with accounting standards that require an assessment of the anticipated settlement outcome of material uncertain tax positions taken in a prior year, or planned to be taken in the current year.

8 unchanged sentences

As of December 31, 2022, income tax years 2018 through 2021 remain open for examination by the State of California.

Income tax years 2018 through 2020 are open for examination by the State of Idaho.

The State of Oregon examined the Oregon corporate income tax returns for tax years 2015, 2016, and 2017.

No material changes occurred as a result of this examination.

Tax years 2018 through 2020 are open for examination by the State of Oregon.

Income tax years 2019 through 2021 are open for examination by the States of Oregon, Idaho, and Texas.

PROPERTY, PLANT, AND EQUIPMENT

2 unchanged sentences

NGD plant in service $ 3,992,676 $ 3,721,939

NGD work in progress 135,398 63,901

NGD construction work in progress 78,897 135,398

Accumulated depreciation 1,115,690 1,098,715

7 unchanged sentences

Other plant in service $ 92,979 $ 57,184

Other construction work in progress 20,040 8,419

Accumulated depreciation 9,935 6,512

5 unchanged sentences

These accrued asset removal costs are reflected on the balance sheet as regulatory liabilities.

Other plant balances include long-lived assets associated with water operations and non-regulated activities not held by NW Natural or its subsidiaries.

Other plant balances include long-lived assets associated with water and wastewater operations and non-regulated activities not held by NW Natural or its subsidiaries.

Other plant balances include non-utility gas storage assets at the Mist facility and other long-lived assets not related to NGD.

The weighted average depreciation rate for NGD assets was 3.0 % in 2021, 3.0 % in 2020, and 2.9 % in 2019.

The weighted average depreciation rate for assets not related to NGD was 1.8 % in 2021, 1.8 % in 2020, and 1.8 % in 2019.

The weighted average depreciation rate for NGD assets was 3.0 % in 2022, 2021, and 2020.

The weighted average depreciation rate for assets not related to NGD was 1.8 % in 2022, 2021, and 2020.

Investments include gas reserves, financial investments in life insurance policies, and equity method investments.

4 unchanged sentences

Investments in gas reserves, non-current 22,970 26,608 22,970 26,608

Investment in unconsolidated affiliates 14,492 18 — —

Investments in unconsolidated affiliates 23,376 14,492 7,782 —

Total other investments $ 95,704 $ 89,278 $ 80,110 $ 74,786

9 unchanged sentences

Investments in Unconsolidated Affiliates

On December 17, 2021, NW Natural Water purchased a 37.3 % ownership stake in Avion Water Company, Inc.

In December 2021, NW Natural Water purchased a 37.3 % ownership stake in Avion Water Company, Inc.

(Avion Water), an investor-owned water utility for $ 14.5 million.

In July 2022, NW Natural Water increased its ownership stake in Avion Water to 40.3 % for an additional $ 1.0 million.

Avion Water operates in Bend, Oregon and the surrounding communities, serving approximately 15,000 customer connections and employing 35 people.

The carrying value of the equity method investment is $ 9.4 million higher than the underlying equity in the net assets of the investee at December 31, 2022 due to equity method goodwill.

Equity in earnings (loss) of Avion Water is included in other income (expense), net.

On August 6, 2020, NWN Energy completed the sale of 100 % of its interest in Trail West Holdings, LLC (TWH) to an unrelated third party for a purchase price of $ 14.0 million, $ 7.0 million of which was paid upon closing the transaction, and $ 7.0 million of which was paid upon the one-year anniversary of the close date.

2 unchanged sentences

The investment in TWH did not meet the criteria to be classified as held for sale or discontinued operations.

In 2020, NW Natural began a partnership with BioCarbN to invest in up to four separate RNG development projects that are designed to access biogas derived from water treatment at Tyson Foods’ processing plants, subject to approval by all parties.

During the construction phase of the projects, NW Natural determined it is the primary beneficiary and fully consolidates each entity.

In 2022, commissioning of the first project, Lexington Renewable Energy LLC (Lexington), was completed and NW Natural determined it was no longer the primary beneficiary and deconsolidated the variable interest entity and recorded the investment in Lexington as an equity method investment.

NW Natural accounts for its interest in Lexington using the equity method of accounting because NW Natural does not control but has the ability to exercise significant influence over Lexington's operations after commissioning.

There was no gain or loss recognized upon deconsolidation.

NW Natural determined the fair value of the investment approximated the carrying value which was primarily comprised of cash and property, plant and equipment.

As of December 31, 2022, NW Natural had an investment balance in Lexington of $ 7.8 million.

Equity in earnings (loss) of Lexington is included in cost of gas.

BUSINESS COMBINATIONS

2022 Business Combinations

Far West Water & Sewer, Inc.

On October 5, 2022, NWN Water completed the acquisition of the water and wastewater utilities of Far West Water & Sewer, Inc.

(Far West), which has a combined approximately 25,000 connections in Yuma, Arizona.

The acquisition-date fair value of the total consideration transferred, after closing adjustments, was approximately $ 97.0 million, of which $ 88.4 million was cash consideration transferred at closing, $ 8.1 million was contingent consideration, and $ 0.5 million was deferred consideration.

The contingent consideration is an earnout payment in an amount equal to the product of (i) the amount, if any, by which the average annual System Operating Revenue for the 2026, 2027, and 2028 years exceeds $ 13.0 million (ii) multiplied by 4 but shall not exceed $ 12.0 million.

As of the acquisition date, the contingent consideration had a fair value of $ 8.1 million and was included in other non-current liabilities.

The fair value as of the acquisition date was determined using a scenario-based technique using management's best estimate of forecast revenue for the years 2026, 2027, and 2028 discounted to present value.

The inputs to determine the fair value of the contingent consideration include estimated future revenue and a risk-adjusted discount rate.

The fair value measurement is based on significant inputs that are not observable in the market and thus represents a fair value measurement categorized within Level 3 of the fair value hierarchy per ASC Topic 820.

The Far West acquisition met the criteria of a business combination, and as such a preliminary allocation of the consideration to the acquired net assets based on their estimated fair value as of the acquisition date was performed.

In accordance with U.S.

This allocation is considered preliminary as of December 31, 2022, as facts and circumstances that existed as of the acquisition date may be discovered as we continue to integrate Far West.

As a result, subsequent adjustments to the preliminary valuation of tangible assets, contract assets and liabilities, tax positions, and goodwill may be required.

Subsequent adjustments are not expected to be significant, and any such adjustments are expected to be completed within the one-year measurement period.

The acquisition costs were expensed as incurred.

Preliminary goodwill of $ 70.8 million was recognized from this acquisition.

The goodwill recognized is attributable to Far West's regulated water utility service territory, experienced workforce, and the strategic benefits for both the water utility and wastewater services expected from growth in its service territory.

No intangible assets aside from goodwill were recognized.

The amount of goodwill that is expected to be deductible for income tax purposes is approximately $ 61.8 million

The preliminary purchase price for the acquisition has been allocated to the net assets acquired as of the acquisition date and is as follows:

In thousands December 31, 2022

Current assets $ 1,281

Property, plant and equipment 25,744

Goodwill 70,842

Non-current assets 684

Current liabilities ( 1,136 )

Non-current liabilities ( 9,011 )

Total net assets acquired $ 88,404

The amount of Far West revenues included in NW Holdings' consolidated statements of comprehensive income is $ 2.9 million for the year ended December 31, 2022.

Earnings from Far West activities for the year ended December 31, 2022 were not material to the results of NW Holdings.

Far West is referred to as Foothills Utilities following the closure of the acquisition.

Other 2022 Business Combinations

During the year ended December 31, 2022, NWN Water and its subsidiaries acquired the assets of six additional businesses qualifying as business combinations.

The aggregate fair value of the preliminary consideration transferred for these acquisitions was $ 8.7 million, most of which was preliminarily allocated to property, plant and equipment and goodwill.

These transactions align with NW Holdings' water and wastewater sector strategy as it continues to expand its water and wastewater service territories and included:

• Belle Oaks Water and Sewer Co., Inc in Texas

• Northwest Water Services, LLC in Washington

• Aquarius Utilities, LLC in Washington

• Valiant Idaho, LLC (The Idaho Club - Sewer) in Idaho

• Caney Creek in Texas

• Water Necessities, Inc.

and Rural Water Co.

2021 Business Combinations

During the year ended December 31, 2021, NWN Water and its subsidiaries completed four acquisitions qualifying as business combinations.

The aggregate fair value of the preliminary consideration transferred for these acquisitions were not material and are not significant to NW Holdings' results of operations.

The aggregate fair value of the consideration transferred for these acquisitions were not material and are not significant to NW Holdings' results of operations.

2020 Business Combinations

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• T&W Water Service Company which was acquired by NWN Water of Texas on March 2, 2020.

As each of these acquisitions met the criteria of a business combination, an allocation of the consideration to the acquired net assets based on their estimated fair value as of the acquisition date was performed.

In accordance with U.S.

GAAP, the fair value determination involves management judgment in determining the significant estimates and assumptions used and was made using existing regulatory conditions for net assets associated with Suncadia Water Company, LLC and T&W Water Service Company, with the remaining difference from consideration transferred being recorded as goodwill.

Final goodwill of $ 18.2 million was recognized from the acquisitions described above.

No intangible assets aside from goodwill were acquired.

The goodwill recognized is attributable to the regulated water utility service territories, experienced workforces, and the strategic benefits from both the water and wastewater utilities expected from growth in their service territories.

The total amount of goodwill that is expected to be deductible for income tax purposes is approximately $ 16.5 million.

The acquisition costs associated with each business combination were expensed as incurred.

T&W Water Service Company is referred to as Blue Topaz Utilities following the closure of the acquisition.

Other 2020 Business Combinations

During the year ended December 31, 2020, NWN Water completed three additional acquisitions, comprised of four water systems and one wastewater system, which qualified as business combinations.

The aggregate fair value of the preliminary consideration transferred for these acquisitions was approximately $ 1.5 million.

The aggregate fair value of the consideration transferred for these acquisitions was approximately $ 1.5 million.

These business combinations were not significant to NW Holdings' results of operations.

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As a result of all acquisitions completed, total goodwill was $ 149.3 million as of December 31, 2022 and $ 70.6 million as of December 31, 2021.

The increase in the goodwill balance was primarily due to additions associated with our acquisitions in the water sector.

The increase in the goodwill balance was primarily due to additions associated with our acquisitions in the water and wastewater sector.

All of our goodwill is related to water and wastewater acquisitions and is included in the other category for segment reporting purposes.

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Purchased Gas Adjustment (PGA)

Derivatives entered into by NW Natural for the procurement or hedging of natural gas for future gas years generally receive regulatory deferral accounting treatment.

Under the PGA mechanism in Oregon, derivatives entered into by NW Natural for the procurement or hedging of natural gas for future gas years generally receive regulatory deferral accounting treatment.

In general, commodity hedging for the current gas year is completed prior to the start of the gas year, and hedge prices are reflected in the weighted-average cost of gas in the PGA filing.

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Unrealized and Realized Gain/Loss

The following table reflects the income statement presentation for the unrealized gains and losses from NW Natural's derivative instruments, which also represents all derivative instruments at NW Holdings:

The following table reflects the income statement presentation for the unrealized gains and losses from NW Natural's derivative instruments:

December 31, 2022 December 31, 2021

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The collateral call exposure is set forth under credit support agreements, which generally contain credit limits.

NW Natural could also be subject to collateral call exposure where it has agreed to provide adequate assurance, which is not specific as to the amount of credit limit allowed, but could potentially require additional collateral in the event of a material adverse change.

NW Natural's financial derivative instruments are subject to master netting arrangements;

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NW Natural utilizes master netting arrangements through International Swaps and Derivatives Association contracts to minimize this risk along with collateral support agreements with counterparties based on their credit ratings.

In certain cases, NW Natural may require guarantees or letters of credit from counterparties to meet its minimum credit requirement standards.

Additionally, NW Natural uses counterparty, industry, sector and country diversification to minimize credit risk.

In certain cases, NW Natural may require counterparties to post collateral, guarantees, or letters of credit to maintain its minimum credit requirement standards.

NW Natural's financial derivatives policy requires counterparties to have an investment-grade credit rating at the time the derivative instrument is entered into, and specifies limits on the contract amount and duration based on each counterparty’s credit rating.

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The results of the model are used to establish trading limits.

NW Natural's outstanding financial derivatives at December 31, 2021 mature by October 31, 2024.

NW Natural's outstanding financial derivatives at December 31, 2022 mature by November 1, 2025.

We could become materially exposed to credit risk with one or more of our counterparties if natural gas prices experience a significant increase.

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Additionally, the assessment of non-performance risk is generally derived from the credit default swap market and from bond market credit spreads.

The impact of the credit risk adjustments for all outstanding derivatives was immaterial to the fair value calculation at December 31, 2021.

The impact of the credit risk adjustments for all financial derivatives outstanding was immaterial to the fair value calculation at December 31, 2022.

As of December 31, 2022 and 2021, the net fair value was an asset of $ 149.7 million and $ 48.0 million, respectively, using significant other observable, or Level 2, inputs.

No Level 3 inputs were used in our derivative valuations during the years ended December 31, 2022 and 2021.

NW Holdings and NWN Water entered into interest rate swap agreements with major financial institutions that effectively convert variable-rate debt to a fixed rate.

Interest payments made between the effective date and expiration date are hedged by the swap agreements.

The notional amount, effective date, expiration date and rate of the swap agreements are shown in the table below:

In millions Notional Amount Effective Date Expiration Date Fixed Rate

NW Holdings $ 100.0 1/17/2023 3/15/2024 4.7 %

NWN Water $ 55.0 1/19/2023 6/10/2026 3.8 %

Unrealized gains and losses related to these interest rate swap agreements are recorded in AOCI on the consolidated balance sheet and totaled $ 129 thousand, net of tax, as of December 31, 2022.

There were no amounts reclassified from AOCI to net income during the year ended December 31, 2022.

COMMITMENTS AND CONTINGENCIES

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Under the agreement, NW Natural committed to purchase the environmental attributes generated by Archaea related to up to ten million therms of RNG annually from its portfolio of RNG production facilities for a fixed fee for a period of 21 years.

The agreement will commence in 2022, with the full annual quantity beginning in 2025.

The agreement commenced in 2022, with the full annual quantity beginning in 2025.

The aggregate amounts of these agreements at NW Natural were as follows at December 31, 2022:

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These preliminary design discussions did not include a cost estimate for cleanup.

None of the alternatives in the EE/CA are more likely than others at this time, and NW Natural expects further design discussion and iteration with the EPA.

No design alternatives are more likely than the EE/CA alternatives at this time, and NW Natural expects further design discussion and iteration with the EPA.

The estimated costs for the various sediment remedy alternatives in the draft EE/CA for the additional studies and design work needed before the cleanup can occur, and for regulatory oversight throughout the cleanup range from $ 51.9 million to $ 350 million.

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The complaint seeks recovery of alleged costs totaling $ 0.3 million in connection with the selection of a remedial action for the Portland Harbor site as well as declaratory judgment for unspecified future remedial action costs and for costs to assess the injury, loss or destruction of natural resources resulting from the release of hazardous substances at and from the Portland Harbor site.

The Yakama Nation has filed two amended complaints addressing certain pleading defects and dismissing the State of Oregon.

On the motion of NW Natural and certain other defendants the federal court has stayed the case

pending the outcome of the non-binding allocation proceeding discussed above.

The Yakama Nation has filed two amended complaints addressing certain pleading defects and

dismissing the State of Oregon.

On the motion of NW Natural and certain other defendants the federal court has stayed the case pending the outcome of the non-binding allocation proceeding discussed above.

NW Natural has recorded a liability for NRD claims which is at the low end of the range of the potential liability;

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The first year of post-construction monitoring was completed in 2021 and demonstrated that the cap was intact and performing as designed.

NW Natural has recognized an additional liability of $ 1.9 million for munitions and design costs, regulatory and permitting issues, and post-construction work.

NW Natural has recognized an additional liability of $ 1.3 million for costs associated with the discovery during construction of World War II-era munitions, design costs, regulatory and permitting issues, and post-construction work.

OREGON STEEL MILLS SITE.

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(2) Excludes 3.3 % of the Front Street site liability as the OPUC only allows recovery of 96.7 % of costs for those sites allocable to Oregon, including those that historically served only Oregon customers.

Amounts excluded from regulatory assets were or $ 0.1 million in 2021 and $ 0.2 million in 2020.

Amounts excluded from regulatory assets were $ 43 thousand in 2022 and $ 62 thousand in 2021.

(3) Environmental costs relate to specific sites approved for regulatory deferral by the OPUC and WUTC.

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NW Natural is subject to claims and litigation arising in the ordinary course of business, including the matters discussed above.

Although the final outcome of any of these legal proceedings cannot be predicted with certainty, including the matter described below, NW Natural and NW Holdings do not expect that the ultimate disposition of any of these matters will have a material effect on financial condition, results of operations, or cash flows.

Although the final outcome of any of these legal proceedings cannot be predicted with certainty, including the matter relating to the Oregon Steel Mills site referenced below, NW Natural and NW Holdings do not expect that the ultimate disposition of any of these matters will have a material effect on their financial condition, results of operations, or cash flows.

See also Part II, Item 1, “Legal Proceedings".

Oregon Steel Mills Site

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General taxes 198

Depreciation and amortization 391 423

Depreciation 391

Other expenses and interest 848

Total expenses 9,368

Income (loss) from discontinued operations 825 ( 4,859 )

Income from discontinued operations 825

Gain on sale of discontinued operations 8,027

Income (loss) from discontinued operations before income tax 8,852 ( 4,859 )

Income tax expense (benefit) (1)

2,344 ( 1,283 )

Income (loss) from discontinued operations, net of tax $ 6,508 $ ( 3,576 )

Income from discontinued operations before income tax 8,852

Income tax expense (1)

Income from discontinued operations, net of tax $ 6,508

(1) Includes income tax expense of $ 2.1 million related to the sale of Gill Ranch for the year ended December 31, 2020.

As a result of the disposition of the membership interests of Gill Ranch, there were no assets or liabilities classified as held for sale at December 31, 2020.

SUBSEQUENT EVENT

On January 6, 2023, NW Natural issued and sold $ 100.0 million aggregate principal amount of its FMBs, 5.43 % Series due January 6, 2053 (the Bonds), to certain institutional investors pursuant to a Bond Purchase Agreement dated December 13, 2022.

The Bonds bear interest at the rate of 5.43 % per annum, payable semi-annually on January 6 and July 6 of each year, commencing July 6, 2023, and will mature on January 6, 2053.

The Bonds will be subject to redemption prior to maturity at the option of NW Natural, in whole or in part, (i) at any time prior to July 6, 2052, at a redemption price equal to 100 % of the principal amount thereof plus a “make-whole” premium and accrued and unpaid interest thereon to the date of redemption, and (ii) at any time on and after July 6, 2052, at 100 % of the principal amount thereof plus accrued and unpaid interest thereon to the date of redemption.

The Bond Purchase Agreement also provides for the issuance of $ 80.0 million aggregate principal amount of NW Natural’s FMBs, 5.18 % Series due 2034 ( 5.18 % Bonds) and $ 50.0 million aggregate principal amount of NW Natural’s FMBs, 5.23 % Series due 2038 ( 5.23 % Bonds).

The 5.18 % Bonds and the 5.23 % Bonds are expected to be issued on or about August 4, 2023.

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF NORTHWEST NATURAL HOLDING COMPANY

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Other comprehensive income (loss) from subsidiaries, net of tax 5,108 1,498 ( 2,169 )

Unrealized gain on interest rate swap, net of tax 11 — —

Comprehensive income $ 91,422 $ 80,164 $ 74,612

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Receivables from affiliates 9,967 2,180

Income taxes receivable — 6,000

Other current assets 2,895 11,348

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Total current liabilities 103,362 160,634

Long-term debt 99,958 —

Total equity 1,175,441 935,146

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Proceeds from common stock issued, net 208,561 17,501 —

Long-term debt issued 100,000 — —

Changes in other short-term debt, net ( 56,000 ) 71,000 49,000

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NW Holdings corrected the previously presented condensed balance sheet for the year ended December 31, 2020, and in doing so, decreased total equity by $ 3.6 million with a corresponding decrease in investment in subsidiaries.

In addition, the condensed statements of comprehensive income for the years ended December 31, 2020 and 2019 were corrected to include other comprehensive loss of $ 2.2 million and $ 2.2 million, respectively.

NW Holdings has evaluated the effect of the misstatement, both qualitatively and quantitatively, and concluded that it did not have a material impact on, nor require amendment of, any previously filed condensed financial statements.

Condensed Statements of Cash Flows Correction

During 2020, NW Holdings identified that activities related to dividends received from subsidiaries had been reported as cash flows from financing activities and should have been presented as operating and investing activities.

NW Holdings corrected the previously presented cash flows for dividends received from subsidiaries and in doing so, the statements of cash flows for the year ended December 31, 2019 was adjusted to decrease net cash flows used from financing activities by $ 88.4 million, with a corresponding increase in net cash flows provided by operating and used in investing activities of $ 53.4 million and $ 35.0 million, respectively.

In addition, the condensed statement of comprehensive income for the year ended December 31, 2020 was corrected to include other comprehensive loss of $ 2.2 million.

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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 8. Financial Statements and Supplementary Data