4 unchanged sentences
NW Natural enters into spot, short-term, and long-term natural gas supply contracts, along with associated pipeline transportation contracts, to manage commodity supply risk.
−Removed: Historically, NW Natural has arranged for physical delivery of an adequate supply of gas, including gas in Mist storage and off-system storage facilities, to meet expected requirements of core NGD customers.
+Added: NW Natural has arranged for physical delivery of an adequate supply of gas, including gas in its Mist storage facility and other off-system storage facilities, to meet expected requirements of core NGD customers.
NW Natural's long-term gas supply contracts are primarily index-based and subject to monthly re-pricing, a strategy that is intended to substantially mitigate credit exposure to physical gas counterparties.
2 unchanged sentences
Natural gas commodity prices are subject to market fluctuations due to unpredictable factors including weather, pipeline transportation congestion, drilling technologies, market speculation, and other factors that affect supply and demand.
−Removed: Commodity price risk is hedged with financial swaps, storage and physical gas reserves from a long-term investment in working interests in gas leases operated by Jonah Energy.
+Added: Commodity price risk is primarily hedged with financial swaps, storage and physical gas reserves from a long-term investment in working interests in gas leases operated by Jonah Energy.
These hedges are generally included in NW Natural's annual PGA filing for recovery, subject to a regulatory prudence review.
Notional amounts under financial derivative contracts were $405.7 million and $359.5 million as of December 31, 2023 and 2022, respectively.
−Removed: The fair value of financial swaps, based on market prices at December 31, 2022, was an unrealized gain of $150.6 million, which would result in cash inflows of $134.3 million in 2023, $10.8 million in 2024, and $5.5 million in 2025.
+Added: The fair value of financial swaps, based on market prices at December 31, 2023, was an unrealized loss of $115.5 million, which would result in cash outflows of $89.6 million in 2024, $22.9 million in 2025, and $3.0 million in 2026.
Interest Rate Risk
−Removed: NW Holdings and NW Natural are exposed to interest rate risk primarily associated with new debt financing needed to fund capital requirements, including future contractual obligations and maturities of long-term and short-term debt.
+Added: NW Holdings and NW Natural are exposed to interest rate risk primarily associated with debt financing needed to fund capital requirements, including future contractual obligations and maturities of long-term and short-term debt.
Interest rate risk is primarily managed through the issuance of fixed-rate debt with varying maturities.
1 unchanged sentence
NW Holdings and NWN Water entered into interest rate swaps transactions for a total notional amount of $155 million to manage variable interest rate risk in December 2022.
−Removed: NW Natural did not have any outstanding interest rate swaps as of December 31, 2022 or 2021.
+Added: Unrealized gains related to these interest rate swap agreements totaled $0.2 million and $0.1 million, net of tax, as of December 31, 2023 and 2022, respectively.
Foreign Currency Risk
−Removed: The costs of certain pipeline and off-system storage services purchased from Canadian suppliers are subject to changes in the value of the Canadian currency in relation to the U.S.
+Added: The costs of certain pipeline fees are subject to changes in the value of the Canadian currency in relation to the U.S.
Foreign currency forward contracts are used to hedge against fluctuations in exchange rates for NW Natural's commodity-related demand and reservation charges paid in Canadian dollars.
Notional amounts under foreign currency forward contracts were $11.9 million and $7.6 million as of December 31, 2023 and 2022, respectively.
−Removed: If all of the foreign currency forward contracts had been settled on December 31, 2022, a loss of $165 thousand would have been realized.
+Added: If all of the foreign currency forward contracts had been settled on December 31, 2023, a gain of $0.2 million would have been realized.
Credit Exposure to Natural Gas Suppliers
6 unchanged sentences
Credit Exposure to Financial Derivative Counterparties
−Removed: Based on estimated fair value at December 31, 2022, NW Natural's overall credit exposure relating to commodity contracts was $150.6 million.
−Removed: We generally have credit exposure to financial commodity swap derivative counterparties when forward gas prices exceed our hedge prices, which was the case with all financial swap counterparties at December 31, 2022.
+Added: NW Natural did not have any credit exposure related to commodity swap contracts based on the estimated fair value at December 31, 2023.
+Added: NW Natural does not have credit exposure to financial commodity swap derivative counterparties when forward gas prices are lower than our hedge prices, which was the case with all financial commodity swap counterparties at December 31, 2023.
NW Natural’s credit exposure also includes interest rate swap and foreign exchange forward counterparties, neither of which were significant at December 31, 2023.
−Removed: NW Natural's financial derivatives policy requires counterparties to have at least an investment-grade credit rating at the time the derivative instrument is entered into and specific limits on the contract amount and duration based on each counterparty’s credit rating.
+Added: NW Natural's financial derivatives policy requires counterparties to have at least an investment-grade credit rating at the time the derivative instrument is entered into and specific limits on the notional amount and duration based on each counterparty’s credit rating.
NW Natural actively monitors and manages derivative credit exposure and places counterparties on hold for trading purposes or requires cash collateral, letters of credit, or guarantees as circumstances warrant.
5 unchanged sentences
AA/Aa $ (100.7) $ 77.9
+Added: A/A (14.8) 72.7
Total $ (115.5) $ 150.6
5 unchanged sentences
The collateral provisions vary by counterparty but are not expected to result in the significant posting of collateral, if any.
−Removed: NW Natural has performed stress tests on the portfolio and concluded the liquidity risk from collateral calls is not material.
+Added: NW Natural has performed stress tests on the gas portfolio and concluded the liquidity risk from collateral calls is not material.
Derivative credit exposure is primarily with investment grade counterparties rated AA-/Aa3 or higher.
15 unchanged sentences
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.