Revenue (Notes)

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

REVENUE

The following tables present disaggregated revenue from continuing operations:



	Three Months Ended June 30,
In thousands	NGD		Other (NW Natural)		NW Natural		Other (NW Holdings)		NW Holdings
2019
Natural gas sales	$	112,015	$	—	$	112,015	$	—	$	112,015
Gas storage revenue, net	—		2,740		2,740		—		2,740
Asset management revenue, net	—		460		460		—		460
Appliance retail center revenue	—		1,058		1,058		—		1,058
Other revenue	104		—		104		1,201		1,305
Revenue from contracts with customers	112,119		4,258		116,377		1,201		117,578

Alternative revenue	3,733		—		3,733		—		3,733
Leasing revenue	2,132		—		2,132		—		2,132
Total operating revenues	$	117,984	$	4,258	$	122,242	$	1,201	$	123,443

2018
Natural gas sales	$	114,726	$	—	$	114,726	$	—	$	114,726
Gas storage revenue, net	—		2,737		2,737		—		2,737
Asset management revenue, net	—		2,140		2,140		—		2,140
Appliance retail center revenue	—		1,171		1,171		—		1,171
Other revenue	—		—		—		4		4
Revenue from contracts with customers	114,726		6,048		120,774		4		120,778

Alternative revenue	3,663		—		3,663		—		3,663
Leasing revenue	126		—		126		—		126
Total operating revenues	$	118,515	$	6,048	$	124,563	$	4	$	124,567



	Six Months Ended June 30,
In thousands	NGD			Other (NW Natural)		NW Natural			Other (NW Holdings)		NW Holdings
2019
Natural gas sales	$	408,201		$	—	$	408,201		$	—	$	408,201
Gas storage revenue, net	—			5,523		5,523			—		5,523
Asset management revenue, net	—			1,966		1,966			—		1,966
Appliance retail center revenue	—			2,574		2,574			—		2,574
Other revenue	104			—		104			1,703		1,807
Revenue from contracts with customers	408,305			10,063		418,368			1,703		420,071

Alternative revenue	(13,520		)	—		(13,520		)	—		(13,520		)
Leasing revenue	2,240			—		2,240			—		2,240
Total operating revenues	$	397,025		$	10,063	$	407,088		$	1,703	$	408,791

2018
Natural gas sales	$	372,954		$	—	$	372,954		$	—	$	372,954
Gas storage revenue, net	—			5,314		5,314			—		5,314
Asset management revenue, net	—			3,719		3,719			—		3,719
Appliance retail center revenue	—			2,717		2,717			—		2,717
Other revenue	—			—		—			4		4
Revenue from contracts with customers	372,954			11,750		384,704			4		384,708

Alternative revenue	3,291			—		3,291			—		3,291
Leasing revenue	203			—		203			—		203
Total operating revenues	$	376,448		$	11,750	$	388,198		$	4	$	388,202

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. Revenue from contracts with customers contains one performance obligation that is generally satisfied over time, using the output method based on time elapsed, due to the continuous nature of the service provided. The transaction price is determined by a set price agreed upon in the contract or dependent on regulatory tariffs. Customer accounts are settled on a monthly basis or paid at time of sale and based on historical experience. It is probable that we will collect substantially all of the consideration to which we are entitled.

NW Holdings and NW Natural do not have any material contract assets, as net accounts receivable and accrued unbilled revenue balances are unconditional and only involve the passage of time until such balances are billed and collected. NW Holdings and NW Natural do not have any material contract liabilities.

Revenue-based taxes are primarily franchise taxes, which are collected from NGD customers and remitted to taxing authorities. Beginning January 1, 2018, revenue taxes are included in operating revenues with an equal and offsetting expense recognized in operating expenses in the consolidated statements of comprehensive income.

Natural Gas Distribution

Natural gas sales. NW Natural's primary source of revenue is providing natural gas to customers in the NGD service territory, which includes residential, commercial, industrial and transportation customers. NGD revenue is generally recognized over time upon delivery of the gas commodity or service to the customer, and the amount of consideration received and recognized as revenue is dependent on the Oregon and Washington tariffs. Customer accounts are to be paid in full each month, and there is no right of return or warranty for services provided. Revenues include firm and interruptible sales and transportation services, franchise taxes recovered from the customer, late payment fees, service fees, and accruals for gas delivered but not yet billed (accrued unbilled revenue). The accrued unbilled revenue balance is based on estimates of deliveries during the period from the last meter reading and management judgment is required for a number of factors used in this calculation, including customer use and weather factors.

We applied the significant financing practical expedient and have not adjusted the consideration NW Natural expects to receive from NGD customers for the effects of a significant financing component as all payment arrangements are settled annually. Due to the election of the right to invoice practical expedient, we do not disclose the value of unsatisfied performance obligations as of June 30, 2019.

Alternative revenue. Weather normalization (WARM) and decoupling mechanisms are considered to be alternative revenue programs. Alternative revenue programs are considered to be contracts between NW Natural and its regulator and are excluded from revenue from contracts with customers.

Leasing revenue. Leasing revenue primarily consists of revenues from NW Natural's North Mist Storage contract with Portland General Electric (PGE) in support of PGE's gas-fired electric power generation facilities under an initial 30-year contract with options to extend, totaling up to an additional 50 years upon mutual agreement of the parties. The facility is accounted for as a sales-type lease with regulatory accounting deferral treatment. The investment is included in rate base under an established cost-of-service tariff schedule, with revenues recognized according to the tariff schedule and as such, profit upon commencement was deferred and will be amortized over the lease term. Leasing revenue also contains rental revenue from small leases of property owned by NW Natural to third parties. The majority of these transactions are accounted for as operating leases and the revenue is recognized over the term of the lease agreement. Lease revenue is excluded from revenue from contracts with customers. See Note 7.

NW Natural Other

Gas storage revenue. NW Natural's other revenue includes gas storage activity, which includes Interstate Storage Services used to store natural gas for customers. Gas storage revenue is generally recognized over time as the gas storage service is provided to the customer and the amount of consideration received and recognized as revenue is dependent on set rates defined per the storage agreements. Noncash consideration in the form of dekatherms of natural gas is received as consideration for providing gas injection services to gas storage customers. This noncash consideration is measured at fair value using the average spot rate. Customer accounts are generally paid in full each month, and there is no right of return or warranty for services provided. Revenues include firm and interruptible storage services, net of the profit sharing amount refunded to NGD customers.

Asset management revenue. Asset management revenue is generally 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. Variable revenues earned above guaranteed amounts are estimated and recognized at the end of each period using the most likely amount approach. Revenues include management services of the storage assets and pipeline capacity provided, net of the profit sharing amount refunded to NGD customers. Asset management accounts are settled on a monthly basis.

As of June 30, 2019, unrecognized revenue for the fixed component of the transaction price related to gas storage and asset management revenue was approximately $58.4 million. Of this amount, approximately $7.4 million will be recognized during the remainder of 2019, $13.7 million in 2020, $12.8 million in 2021, $9.1 million in 2022, $7.8 million in 2023 and $7.5 million thereafter. The amounts presented here are calculated using current contracted rates.

Appliance retail center revenue. NW Natural owns and operates an appliance store that is open to the public, where customers can purchase natural gas home appliances. Revenue from the sale of appliances is recognized at the point in time in which the appliance is transferred to the third party responsible for delivery and installation services and when the customer has legal title to the appliance. It is required that the sale be paid for in full prior to transfer of legal title. The amount of consideration received and recognized as revenue varies with changes in marketing incentives and discounts offered to customers.

NW Holdings Other

NW Holdings' primary source of other revenue is providing water and wastewater services to customers. Water distribution revenue is generally recognized over time upon delivery of the water commodity or service to the customer, and the amount of consideration received and recognized as revenue is dependent on the Oregon, Washington and Idaho tariffs. Customer accounts are to be paid in full each month, and there is no right of return or warranty for services provided.

We applied the significant financing practical expedient and have not adjusted the consideration we expect to receive from water distribution customers for the effects of a significant financing component as all payment arrangements are settled annually. Due to the election of the right to invoice practical expedient, we do not disclose the value of unsatisfied performance obligations as of June 30, 2019.