Segment Information

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

We primarily operate in two reportable business segments: local gas distribution and gas storage. We also have other investments and business activities not specifically related to one of these two reporting segments, which are aggregated and reported as other. We refer to our local gas distribution business as the utility, and our gas storage segment and other as non-utility. Our utility segment also includes the utility portion of our Mist underground storage facility and our North Mist gas storage expansion in Oregon and NWN Gas Reserves, which is a wholly-owned subsidiary of Energy Corp. Our gas storage segment includes NWN Gas Storage, which is a wholly-owned subsidiary of NWN Energy, Gill Ranch, which is a wholly-owned subsidiary of NWN Gas Storage, the non-utility portion of Mist, and all third-party asset management services. Other includes NNG Financial and NWN Energy's equity investment in TWH, which is pursuing development of a cross-Cascades transmission pipeline project. See Note 4 in the 2016 Form 10-K for further discussion of our segments.

Inter-segment transactions were immaterial for the periods presented. The following table presents summary financial information concerning the reportable segments:

	Three Months Ended September 30,
In thousands	Utility			Gas Storage		Other			Total
2017
Operating revenues	$	81,126		$	7,006	$	58		$	88,190
Depreciation and amortization	20,023			1,461		—			21,484
Income (loss) from operations	(9,977		)	3,543		(222		)	(6,656		)
Net income (loss)	(10,349		)	1,899		(45		)	(8,495		)
Capital expenditures	50,009			164		950			51,123
2016
Operating revenues	$	80,378		$	7,293	$	56		$	87,727
Depreciation and amortization	19,173			1,455		—			20,628
Income (loss) from operations	(7,264		)	3,502		(675		)	(4,437		)
Net income (loss)	(9,511		)	1,813		(342		)	(8,040		)
Capital expenditures	36,238			437		—			36,675

	Nine Months Ended September 30,
In thousands	Utility		Gas Storage		Other			Total
2017
Operating revenues	$	503,947	$	17,635	$	169		$	521,751
Depreciation and amortization	59,541		4,383		—			63,924
Income (loss) from operations	77,706		5,748		(725		)	82,729
Net income (loss)	31,980		2,716		(152		)	34,544
Capital expenditures	143,128		1,363		950			145,441
Total assets at September 30, 2017	2,835,860		252,041		17,706			3,105,607
2016
Operating revenues	$	422,617	$	19,654	$	168		$	442,439
Depreciation and amortization	56,894		4,541		—			61,435
Income from operations	74,745		8,107		(611		)	82,241
Net income	26,848		3,988		(216		)	30,620
Capital expenditures	96,710		1,401		—			98,111
Total assets at September 30, 2016	2,684,618		259,483		15,783			2,959,884
Total assets at December 31, 2016	2,806,627		256,333		16,841			3,079,801

Utility Margin

Utility margin is a financial measure consisting of utility operating revenues, which are reduced by revenue taxes, the associated cost of gas, and environmental recovery revenues. The cost of gas purchased for utility customers is generally a pass-through cost in the amount of revenues billed to regulated utility customers. Environmental recovery revenues represent collections received from customers through our environmental recovery mechanism in Oregon. These collections are offset by the amortization of environmental liabilities, which is presented as environmental remediation expense in our operating expenses. By subtracting cost of gas and environmental remediation expense from utility operating revenues, utility margin provides a key metric used by our chief operating decision maker in assessing the performance of the utility segment. The gas storage segment and other emphasize growth in operating revenues as opposed to margin because they do not incur a product cost (i.e. cost of gas sold) like the utility and, therefore, use operating revenues and net income to assess performance.

The following table presents additional segment information concerning utility margin:

	Three Months Ended September 30,				Nine Months Ended September 30,
In thousands	2017		2016		2017		2016
Utility margin calculation:
Utility operating revenues (1)	$	81,126	$	80,378	$	503,947	$	422,617
Less: Utility cost of gas	27,239		28,264		223,855		157,546
Environmental remediation expense	1,355		1,191		10,920		8,113
Utility margin	$	52,532	$	50,923	$	269,172	$	256,958

⁽¹⁾   Utility operating revenues include environmental recovery revenues, which are collections received from customers through our environmental recovery mechanism in Oregon, offset by environmental remediation expense.