What changed in this filing

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Item 1. Business

2024-02-23 compared with 2023-02-24 · 66 added, 60 removed, 285 unchanged (31% of the section changed)

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

Our mission is to provide safe, reliable and affordable utility services and renewable energy in a sustainable way to better the lives of the communities we serve.

We support our mission by following our core values of service ethic, integrity, safety, caring, and environmental stewardship.

NATURAL GAS DISTRIBUTION (NGD) SEGMENT

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(1) NGD margin is also affected by other items, including miscellaneous revenues, gains or losses from NW Natural's gas cost incentive sharing mechanism, other margin adjustments, and other regulated services.

Generally, residential and commercial customers purchase both their natural gas commodity (gas sales) and natural gas delivery services (transportation services) from the NGD business.

Industrial customers also purchase transportation services, but may buy the gas commodity either from NW Natural or directly from a third-party gas marketer or supplier.

Generally, residential and commercial customers purchase both their natural gas commodity (gas sales) and natural gas delivery services from the NGD business.

Industrial and some large commercial customers also purchase transportation, but may buy the gas commodity either from NW Natural or directly from a third-party gas marketer or supplier.

Gas commodity cost is primarily a pass-through cost to customers;

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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 rates or possible restrictions for changes between elections, and in some cases, a minimum or maximum volume requirement before changing options.

To help manage gas supplies, tariffs are designed to provide some certainty regarding industrial and commercial customers' volumes by requiring an annual service election, special rates or possible restrictions for changes between elections.

We estimate natural gas was in approximately 63% of single-family residential homes in NW Natural's service territory in 2023.

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However, it competes with other forms of energy in each customer class.

This competition among energy suppliers is based on price, efficiency, reliability, performance, preference, market conditions, building codes, technology, federal, state, and local energy policy, and environmental impacts.

This competition among energy suppliers is based on price, efficiency, reliability, performance, preference, perceptions, market conditions, building codes, technology, federal, state, and local energy policy, and environmental impacts.

For residential and small to mid-size commercial customers, the NGD business competes primarily with providers of electricity, fuel oil, and propane.

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The extraction of shale gas has increased the availability of gas supplies throughout North America.

We believe gas supplies available in the western United States and Canada are adequate to serve NGD customer requirements for the foreseeable future.

We believe gas supplies available in the western United States and Canada are adequate to serve NGD customer requirements for the foreseeable

NW Natural continues to evaluate the long-term supply mix based on projections of gas production and pricing in the U.S.

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(3) The storage facility is located near Chehalis, Washington and is contracted from Northwest Pipeline, a subsidiary of The Williams Companies.

The Mist facility serves NGD segment customers and is also used for non-NGD purposes, primarily for contracts with gas storage customers, including utilities and third-party marketers.

The Mist facility serves NGD segment customers and is also used for non-NGD purposes, primarily for contracts with gas storage customers, including utilities, third-party marketers, and electric generators.

Under regulatory agreements with the OPUC and WUTC, gas storage at Mist can be developed in advance of NGD customer needs but is subject to recall when needed to serve such customers as their demand increases.

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NW Natural has a diverse portfolio of short-, medium-, and long-term firm gas supply contracts and a variety of contract types including firm and interruptible supplies as well as supplemental supplies from gas storage facilities.

The portfolio of firm gas supply contracts typically includes the following gas purchase contracts:

year-round and winter-only baseload supplies;

seasonal supply with an option to call on additional daily supplies during the winter heating season;

and daily or monthly spot purchases.

The majority of our gas supply contracts include year-round, winter-only, summer-only, and monthly baseload supplies, and daily spot purchases.

We also maintain options to call on additional daily supplies during the winter heating season.

During 2023, a total of 875 million therms were purchased under contracts with durations as follows:

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Spot (one month or less) 25

Gas supply contracts are renewed or replaced as they expire.

During 2022, there was one supplier that provided 10% of the NGD business gas supply requirements.

During 2023, there was one supplier that provided 10% or more of the NGD business gas supply requirements.

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

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gas storage costs;

gas reserves contracts;

gas reserves costs;

gas commodity derivative contracts;

and renewable natural gas and its attributes, including renewable thermal certificates (RTCs).

We expect that costs to comply with Oregon's Climate Protection Program (CPP) and Washington's Climate Commitment Act (CCA) programs will be included in the cost of gas.

and renewable natural gas and its attributes,

including renewable thermal certificates.

We expect that costs to comply with Washington's Climate Commitment Act (CCA) and any similar program that may be enacted in our service territory will be included in the cost of gas.

The NGD business employs a number of strategies to mitigate the cost of gas sold to customers.

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Risks associated with gas cost recovery are minimized by resetting customer rates annually through the PGA and aligning customer and shareholder interests through the use of sharing, weather normalization, and conservation mechanisms in Oregon.

See Part II, Item 7, "Results of Operations— Regulatory Matters " and "Results of Operations—Business Segments—Natural Gas Distribution Operations— Cost of Gas " .

See Part II, Item 7, "Results of Operations— Regulatory Matters " and "Results of Operations—Business Segment—Natural Gas Distribution Operations— Cost of Gas " .

Environmental Stewardship

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In 2019, we began using this emissions intensity screening tool alongside other purchasing criteria such as price, credit worthiness and geographic diversity.

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

We view this as a cost-neutral way to reduce carbon emissions associated with our natural gas supply.

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).

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

In 2019, the Washington State legislature also passed a bill supporting RNG procurement, House Bill 1257.

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

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See Part II, Item 7, "Results of Operations— Regulatory Matters ".

In addition to purchases of RNG, NW Natural is subject to the carbon-reduction requirements of the Oregon CPP and the Washington CCA programs.

NW Natural has modeled pathways to compliance with the CPP and CCA in its most recent IRP, which are currently under review by the OPUC and WUTC.

In addition to purchases of RNG, NW Natural is currently piloting a hydrogen blend in pipelines serving its Sherwood Operations and Training Center.

NW Natural has tested a blend of 15% hydrogen and is now testing a blend of 20% hydrogen at that location.

Additionally, NW Natural is focused on developing several hydrogen pilots for industrial and commercial customers to support their decarbonization goals.

NW Natural is subject to the requirements of the Washington CCA cap-and-invest program, and could be subject to additional programs currently under consideration in Oregon.

NW Natural has modeled pathways to compliance with the CCA in its most recent IRP.

While costs associated with each possible compliance pathway differ, we intend to pursue recovery of the costs associated with these programs in rates.

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The largest pipeline agreements are with Northwest Pipeline.

NW Natural actively works with Northwest Pipeline and others to renew contracts in advance of expiration to ensure gas transportation capacity is sufficient to meet customer needs.

NW Natural actively works with

Northwest Pipeline and others to renew contracts in advance of expiration to ensure gas transportation capacity is sufficient to meet customer needs.

Rates for interstate pipeline transportation services are established by FERC within the U.S.

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

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 second portion of the rule known as the gas gathering rule was issued in late 2021, and final rulemaking titled "The Safety of Gas Transmission Pipelines:

Repair Criteria, Integrity Management Improvements, Cathodic Protection, Management of Change, and Other Related Amendments" was issued in August 2022.

A Gas Pipeline Leak Detection rule is expected to be issued in 2023.

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

We expect the costs associated with compliance with federal, state, and local laws and regulations to be recovered in rates.

In May 2023, PHMSA issued a notice of proposed rulemaking:

Gas Pipeline Leak Detection and Repair.

The proposed rulemaking includes congressional mandates from the PIPES (Protecting our Infrastructure of Pipelines and Enhancing Safety) Act of 2020 to reduce methane emissions from new and existing gas transmission, distribution, gathering, underground storage, and LNG facilities.

In September 2023, PHMSA issued a notice of proposed rulemaking:

Safety of Gas Distribution Pipelines and Other Pipeline Safety Initiatives.

The proposed rulemaking requires operators to update distribution integrity management programs, emergency response plans, operations and maintenance manuals, and other safety practices.

North Mist Gas Storage Facility

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

The North Mist gas storage facility began operations in 2019.

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

PGE uses the facility to fuel its gas-fired electric power generation facilities, 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 deliverability per day, no-notice service that can be drawn on rapidly, and a 13-mile pipeline to connect to PGE's Port Westward gas plants in Clatskanie, Oregon.

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.

PGE uses the facility to fuel its gas-fired electric power generation facilities.

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

The facility is included in rate base under an established tariff schedule with revenues recognized consistent with the schedule.

Billing rates are updated annually to the forecasted depreciable asset level and forecasted operating expenses.

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The following businesses and activities are aggregated and reported as other under NW Natural, a wholly-owned subsidiary of NW Holdings:

• 5.8 Bcf of the Mist gas storage facility contracted to other utilities and third-party marketers;

• 5.8 Bcf of the Mist gas storage facility contracted to other utilities, third-party marketers, and electric generators;

• natural gas asset management activities;

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It is a 17.5 Bcf facility with 11.7 Bcf used to provide gas storage for the NGD business.

The remaining 5.8 Bcf of the facility is contracted with other utilities and third-party marketers with these results reported in other.

In 2022, NW Natural utilized 0.5 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 17.0 Bcf in 2021 to 17.5 Bcf in 2022.

The remaining 5.8 Bcf of the facility is contracted with other utilities, third-party marketers, and electric generators with these results reported in other.

The overall facility consists of seven depleted natural gas reservoirs, 21 injection and withdrawal wells, a compressor station, dehydration and control equipment, gathering lines, and other related facilities.

The capacity at Mist serving other utilities and third-party marketers provides multi-cycle gas storage services to customers in the interstate and intrastate markets.

The capacity at Mist provides multi-cycle gas storage services to customers in the interstate and intrastate markets.

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.

Gas storage revenues from the 5.8 Bcf are derived primarily from firm service customers who provide energy-related services,

including natural gas distribution, electric generation, and energy marketing.

Gas storage revenues from the 5.8 Bcf are derived primarily from firm service customers who provide energy-related services, including natural gas distribution, electric generation, and energy marketing.

The Mist facility benefits from limited competition as there are few storage facilities in the Pacific Northwest region.

Therefore, NW Natural is able to acquire high-value, multi-year contracts.

Therefore, NW Natural has the ability to acquire high-value, multi-year contracts.

Asset Management Activities

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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;

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

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

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NWN Water continues to grow though customer additions within or near its service territories, and continues to pursue acquisitions.

For recently acquired water utilities, see further discussion about the status of water general rate cases in Part II, Item 7, "Results of Operations—Regulatory Matters— Water General Rate Cases ."

See further discussion about the status of water general rate cases in Part II, Item 7, "Results of Operations—Regulatory Matters— Water and Wastewater Utilities ."

The water and wastewater utilities primarily serve residential and commercial customers.

Water distribution operations are seasonal in nature with peak demand during warmer summer months, while wastewater is less seasonally affected.

Water distribution operations are seasonal in nature with peak demand generally during warmer summer months, while wastewater is less seasonally affected.

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 consist of some state regulated systems and some systems that are not rate regulated by utility commissions.

NWN Water launched its services business in April 2023.

This business provides operations and maintenance services to water and wastewater system owners and works to create value by leveraging shared personnel, technology and expertise to support delivery of clean, reliable water at a reasonable cost.

Today, NWN Water provides operations and maintenance services to nearly 20,000 connections.

NW Natural Renewables

NW Natural Renewables is a newly formed non-regulated subsidiary of NW Natural Holdings established to invest in renewable energy through the production and supply of lower-carbon fuels.

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 the spring of 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 produced from the facilities for NW Natural Renewables.

In 2022, NW Natural Renewables executed a four-year off-take agreement with a counterparty for the near-term RNG production.

NW Natural Renewables is currently in discussions with other counterparties to contract the remaining RNG production under long-term contracts.

NW Natural Renewables is an unregulated subsidiary of NW Natural Holdings established to pursue unregulated renewable natural gas activities.

In September 2021, a subsidiary of NW Natural Renewables, NW Natural Ohio Renewable Energy, LLC (Ohio Renewables) and a subsidiary of EDL, a global producer of sustainable distributed energy, executed agreements to partially fund two production facilities that are designed to convert landfill waste gases to RNG (EDL Facilities).

The EDL Facilities have been constructed, and testing and commissioning of these facilities is underway, but has been delayed.

Upon each EDL Facility achieving full commercial operations, Ohio Renewables is committed to make cash payments of approximately $25 million for each facility to partially fund the infrastructure required to condition biogas.

Alongside these development agreements, Ohio Renewables and a subsidiary of EDL executed agreements for Ohio Renewables to purchase up to an annual specified amount of RNG produced by the EDL Facilities over a 20-year period.

The agreements provide that either party may terminate the agreements and related transactions with respect to the subject facility if it does not reach commercial operations and the funding does not close by December 31, 2023, provided the terminating party has not failed to fulfill its obligations under such agreements, including with respect to achieving commercial operations.

Ohio Renewables has contracted to sell RNG produced by the EDL Facilities up to certain specified volumes in each of calendar years 2024 through 2026 to an investment-grade counterparty.

Ohio Renewables additionally has contracted to sell a fixed-volume amount of RNG under a long-term agreement with an investment-grade utility beginning in 2025 and extending through 2042.

ENVIRONMENTAL MATTERS

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In November 2019, NW Natural's unionized employees ratified a collective bargaining agreement that took effect on December 1, 2019 and extends to May 31, 2024, and thereafter from year to year unless either party serves notice of its intent to negotiate modifications to the collective bargaining agreement.

In September 2023, OPEIU provided a notice of intent to negotiate, and negotiations are currently underway.

During calendar year 2023, NW Natural did not incur any work stoppages (strikes or lockouts), and therefore, experienced zero idle days for the year.

Certain subsidiaries may receive services from employees of other subsidiaries.

When such services involve regulated entities, those entities receiving services reimburse the entity providing services pursuant to shared services agreements, as applicable.

Those services are generally charged to the entity receiving those services.

When such services involve regulated entities, those entities receiving services are generally charged rates pursuant to shared services agreements that are filed with the applicable state regulatory commission, as applicable.

Safety is one of our greatest responsibilities to employees.

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We believe employee safety is critical to our success.

A portion of executives’ compensation is tied to achieving our safety metrics, and our Board of Directors regularly reviews company safety metrics.

NW Natural’s health and safety policies and procedures are designed to comply with all applicable regulations, but we also work to go beyond compliance by striving to incorporate industry best practices and benchmarking.

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 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.

A portion of executives’ compensation is tied to achieving our identified safety metrics, and our Board of Directors regularly reviews company safety metrics and receives reports on matters of health and safety.

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

Employees complete classroom instruction and hands-on, scenario-based training at our training town 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 are designed to 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 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.

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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.

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We intend to disclose revisions and amendments to, and any waivers from, the Code of Ethics for officers and directors on our website.

Our Corporate Governance Standards, Director Independence Standards, charters of each of the committees of

the Board of Directors, and additional information about NW Holdings and NW Natural are also available at the website.

Our Corporate Governance Standards, Director Independence Standards, charters of each of the committees of the Board of Directors, and additional information about NW Holdings and NW Natural are also available at the website.

Copies of these documents may be requested, at no cost, by writing or calling Shareholder Services, Northwest Natural Holding Company, 250 S.W.

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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